Project-specific insolvency in real estate confines claims to one project, while other project stakeholders may proceed independently.

In real estate insolvency initiated by allottees of a single project, the corporate insolvency resolution process should ordinarily remain project-specific and not extend to other independent projects of the same corporate debtor. Claims must therefore be collated and updated only in relation to the concerned project, while stakeholders of other projects retain the liberty to pursue their remedies independently in accordance with law. The resolution professional is required to invite and update claims project-wise, including any payments already made under interim directions, so that unrelated projects are not drawn into the same insolvency process.

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Issues: (i) Whether the corporate insolvency resolution process initiated on the basis of claims arising from a single real estate project should be confined to that project alone; (ii) Whether stakeholders of other projects of the corporate debtor can pursue their claims independently and whether the resolution professional should invite and update claims project-wise.

Issue (i): Whether the corporate insolvency resolution process initiated on the basis of claims arising from a single real estate project should be confined to that project alone.

Analysis: The claims before the adjudicating authority arose from allottees of one identified project. The settled approach in real estate insolvency is that where financial creditors in a class invoke Section 7 on the basis of default in a particular project, the resolution process should ordinarily remain project-specific so that solvent or unrelated projects are not brought within the same insolvency umbrella. That approach protects homebuyers of the concerned project while avoiding collateral prejudice to stakeholders of other projects.

Conclusion: The corporate insolvency resolution process was required to be confined to the specific project concerned, namely Krishna Housing Scheme, and not to the corporate debtor as a whole.

Issue (ii): Whether stakeholders of other projects of the corporate debtor can pursue their claims independently and whether the resolution professional should invite and update claims project-wise.

Analysis: Since the insolvency was confined to one project, claims had to be collated and updated in relation to that project alone. Other stakeholders and financial institutions asserting rights in respect of different projects were not required to be absorbed into this project-specific process and were free to pursue their own proceedings in accordance with law. The resolution professional was therefore required to issue a corrigendum inviting claims only for the concerned project and to update the claims already received, including payments made under the court's interim directions.

Conclusion: Other project-wise stakeholders were left free to proceed independently, and the resolution professional was directed to handle claims only for Krishna Housing Scheme.

Final Conclusion: The appeal succeeded to the extent that the insolvency process was narrowed to the concerned real estate project, with consequential directions for project-specific claim collation and preservation of remedies of stakeholders of other projects.

Ratio Decidendi: In a real estate insolvency initiated by allottees or financial creditors of one project, the corporate insolvency resolution process should ordinarily be confined to that project alone and should not extend to other independent projects of the same corporate debtor.

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