Assured returns creditors in real estate projects must meet Section 7 threshold requirements under 2020 IBC Amendment

The NCLAT dismissed an appeal challenging the maintainability of a Section 7 application under the IBC. The court held that assured returns class creditors in real estate projects qualify as "allottees" and must comply with the threshold requirement introduced by the 2020 IBC Amendment. The amendment mandates applications be filed jointly by at least 100 allottees or 10% of total allottees, whichever is less. Since the appellants failed to meet this threshold criteria, their Section 7 application was deemed non-maintainable, confirming the lower court's decision.

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Issues Involved:
1. Maintainability of Section 7 application under IBC post-amendment.
2. Distinction between financial creditors as allottees and those under assured return schemes.
3. Compliance with the threshold requirement under amended Section 7 of IBC.

Issue-Wise Detailed Analysis:

1. Maintainability of Section 7 Application under IBC Post-Amendment:

The primary issue was whether the Section 7 application filed by the Appellants is maintainable in light of the threshold introduced by the Amendment Act 1 of 2020 to the IBC. The amendment requires that a Section 7 application by financial creditors who are allottees under a real estate project must be filed jointly by not less than 100 allottees or 10% of the total number of allottees, whichever is less. The Appellants contended that their application was not impacted by this amendment as they approached the Adjudicating Authority not as allottees but based on an independent agreement (MOU) for Monthly Assured Return (MAR). However, the Tribunal found that the Appellants, being part of the assured returns class of creditors, fall under the definition of 'allottees' and thus must comply with the threshold requirement.

2. Distinction Between Financial Creditors as Allottees and Those Under Assured Return Schemes:

The Appellants argued that their claim arises from the MAR Plan, a separate agreement from the allotment, and thus they should not be considered allottees under the IBC. They relied on the judgment in *Nikhil Mehta and Sons Vs. AMR Infrastructure Ltd*, which held that recipients under assured return investment schemes are financial creditors. The Tribunal, however, held that even commercial space/unit allottees under assured return schemes are covered under the definition of 'allottee' as per RERA and IBC. The Tribunal noted that the Adjudicating Authority correctly observed that the assured returns class of creditors does not fall outside the ambit of 'allottees.'

3. Compliance with the Threshold Requirement Under Amended Section 7 of IBC:

The Tribunal emphasized that the Appellants, being part of the assured returns class of creditors in a real estate project, must meet the threshold criteria of not less than 100 such creditors or 10% of the total number of creditors to file a Section 7 application. The Appellants failed to comply with this requirement. The Tribunal also referenced the judgment in *Rahul Gyanchandani Vs Parsvnath Landmark Developers Pvt Ltd*, which upheld that homebuyers are 'allottees' and must comply with the second proviso to Section 7(1) of IBC. The Tribunal concluded that the Appellants' artificial distinction between financial creditors under MAR Plan and allottees is not tenable, and thus, their Section 7 application is non-maintainable.

Conclusion:
The Tribunal dismissed the appeal, holding that the Appellants, being allottees under the MAR Plan, must comply with the amended Section 7(1) of IBC. The Tribunal found no merit in the Appellants' arguments and upheld the Adjudicating Authority's decision. No order as to costs was made.

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