RERA relief does not strip home buyer status, and unequal treatment of similarly placed allottees is invalid.

A real estate allottee does not lose the status of financial creditor or home buyer merely because relief has been obtained under RERA; crystallisation of the claim by a RERA order does not alter the character of the underlying debt under the Insolvency and Bankruptcy Code, 2016. A resolution plan cannot validly create a separate class between allottees who invoked RERA remedies and those who did not, because such a distinction is artificial, lacks rational basis, and offends Article 14. The overriding effect of the IBC prevents such differential treatment of similarly situated allottees in insolvency.

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Issues: (i) Whether an allottee who had obtained relief under the Real Estate (Regulation and Development) Act, 2016 ceased to be a financial creditor or home buyer for the purposes of the insolvency resolution plan; (ii) Whether the resolution plan could validly create a separate class between allottees who had invoked RERA remedies and those who had not.

Issue (i): Whether an allottee who had obtained relief under the Real Estate (Regulation and Development) Act, 2016 ceased to be a financial creditor or home buyer for the purposes of the insolvency resolution plan.

Analysis: The explanation to Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 deems amounts raised from an allottee under a real estate project to be amounts having the commercial effect of borrowing. On that basis, home buyers and allottees fall within the class of financial creditors. The fact that the underlying claim has been crystallised by an order or decree under RERA does not alter the character of the claim or the status of the allottee as a financial creditor.

Conclusion: The allottee did not cease to be a financial creditor or home buyer and remained entitled to treatment as such in the insolvency process.

Issue (ii): Whether the resolution plan could validly create a separate class between allottees who had invoked RERA remedies and those who had not.

Analysis: Section 238 of the Insolvency and Bankruptcy Code, 2016 gives the Code overriding effect. A distinction based only on whether some allottees had pursued RERA remedies and obtained relief was held to be artificial and inequitable. Such a classification had no rational basis for differential treatment among similarly situated financial creditors and amounted to hyper-classification offending Article 14 of the Constitution of India.

Conclusion: The separate treatment of RERA decree-holding allottees was invalid and could not be sustained.

Final Conclusion: The impugned order was set aside, and the appellants were recognised as financial creditors to be treated along with other home buyers and financial creditors under the resolution plan.

Ratio Decidendi: A real-estate allottee does not lose the status of financial creditor by obtaining a RERA decree, and any differential treatment among similarly placed allottees in insolvency must satisfy constitutional equality and cannot defeat the overriding effect of the Insolvency and Bankruptcy Code, 2016.

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