Threshold for initiation by homebuyers in insolvency proceedings turns on developer's project share at filing, appeal allowed and matter remanded for fresh adjudication.

Homebuyers challenged threshold for initiating insolvency proceedings where developer and landowner shared project proceeds; the tribunal found the developer's contractual share (18% of project units) established the relevant creditor base and that threshold must be measured at the time of filing, not later, making the appellants' numeric strength sufficient and rendering the Adjudicating Authority's dismissal erroneous. The tribunal also noted repeated nonappearance of the corporate debtor and proceeded ex parte, but did not decide merits; it allowed the appeal, set aside the impugned order and remanded the petition for fresh adjudication with directions to appear on the listed date.

---

---

Issues: Whether the class of homebuyers (allottees) who filed CP (IB) No.196/2023 satisfied the threshold under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating CIRP against Earth Towne Infrastructure Pvt. Ltd., and whether the Adjudicating Authority erred in rejecting the Section 7 petition by excluding claimants admitted in the CIRP of the related holding/developer company.

Analysis: The threshold in Section 7 requires either one hundred allottees under the same real estate project or ten per cent. of such allottees, whichever is less, to file jointly. The threshold is to be assessed at the time of filing of the Section 7 application. The corporate structure and development agreement show that the Corporate Debtor was the landholding SPV with an 18% share of the project; calculating the Corporate Debtor's share yields a lower numerical threshold (including on the basis of units actually sold by the Corporate Debtor). Admission of claims in the CIRP of a related developer (holding) does not, by itself, negate the independent threshold or the right of the allottees to proceed against the Corporate Debtor where the Corporate Debtor has separate liability and the allottees have contractual recourse against it. The Adjudicating Authority's approach of subtracting claimants admitted in the developer's CIRP and then applying the 100-applicants benchmark was legally erroneous because it did not apply the threshold as at the time of filing against the Corporate Debtor's attributable allottees.

Conclusion: The appeal is allowed. The Impugned Order dated 21.10.2024 is set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication on maintainability and other issues, with parties directed to appear on the specified date. This conclusion is in favour of the Appellant.

Ratio Decidendi: For Section 7 applications by allottees in a real estate project, the statutory threshold (one hundred allottees or ten per cent.) must be determined with reference to the corporate debtor's attributable allottees and as of the time of filing; claimants' admission in a separate CIRP of a related developer does not automatically defeat an independent Section 7 filing against the landowner/SPV.

---