Locus standi and homebuyer threshold in Section 7 filings: only allottees of the same project count, and outsiders cannot challenge admission.
A person who is neither an allottee nor otherwise directly concerned with the real estate project lacks locus standi to challenge admission of a Section 7 insolvency application filed by homebuyers of that project. The statutory threshold for filing by allottees must be computed only with reference to allottees of the same real estate project, not unrelated projects or components. On the facts, the residential component was treated as a distinct project, and the application filed by 29 allottees out of 255 residential units satisfied the 10% threshold. The admission of the insolvency application was therefore left undisturbed.
Issues: (i) Whether the appellant had locus standi to challenge admission of the Section 7 application; (ii) Whether the financial creditors in class satisfied the 10% threshold for filing the Section 7 application in respect of the same real estate project.
Issue (i): Whether the appellant had locus standi to challenge admission of the Section 7 application.
Analysis: The appellant was neither an allottee in the residential project nor an allottee of any commercial unit in the development. The challenge was to admission of insolvency proceedings initiated by homebuyers of the same project. A stranger to the project, having no direct stake in the real estate project that formed the subject matter of insolvency, could not maintain the appeal against admission of the Section 7 application.
Conclusion: The appellant had no locus standi to challenge the impugned order.
Issue (ii): Whether the financial creditors in class satisfied the 10% threshold for filing the Section 7 application in respect of the same real estate project.
Analysis: The relevant project was a mixed-use development, but the Section 7 application was filed by allottees of the registered residential project Lotus Isle (Residential). The sanctioned plan and RERA registration showed the residential component as a distinct real estate project for the purpose of the homebuyer threshold. The total residential units were 255, and the application was filed by 29 allottees, which satisfied the statutory minimum. The principle applied was that allottees must be reckoned only from the same real estate project, not from unrelated projects or components.
Conclusion: The 10% threshold under Section 7 was satisfied and the application was maintainable.
Final Conclusion: The appeal failed on both the preliminary objection and the merits of the threshold challenge, and the admission of the insolvency application was left undisturbed.
Ratio Decidendi: For a Section 7 application by allottees, the statutory threshold must be computed only with reference to allottees of the same real estate project, and a person who is neither an allottee nor otherwise directly concerned with that project lacks standing to challenge admission of the application.
TaxTMI 
AI Drafter ✕
TaxTMI 
