SCOI Upholds Homebuyers’ Rights in IREO Project Insolvency

In Amit Nehra & Anr. v. Pawan Kumar Garg & Ors. (C.A. No. 4296 of 2025), the Supreme Court decisively addressed the tension between homebuyers’ rights and insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC).

The appellants, who had paid nearly the full consideration for an apartment in the IREO Rise (Gardenia) project in Mohali, were denied possession by both the NCLT and NCLAT, being treated as “belated claimants” entitled only to a partial refund under Clause 18.4(xi) of the approved resolution plan.

What Court Said?

The Court rejected this approach, emphasizing that the appellants’ claim had in fact been verified, admitted, and included in the list of financial creditors by the Resolution Professional. Once incorporated, such claims cannot be brushed aside or reduced to discretionary refunds.

Importantly, the Court clarified that the distinction between verified and belated claims must be maintained; treating bona fide homebuyers who had substantially paid in full as residual claimants would undermine both the object of the IBC and principles of equity.

Relying on precedents such as Puneet Kaur v. K.V. Developers Pvt. Ltd., the Bench stressed that resolution plans must reflect the legitimate expectations of homebuyers whose details are already on record, as non-consideration leads to “inequitable and unfair resolution.”

Accordingly, the NCLT and NCLAT orders were set aside, and the Court directed the respondents to execute the conveyance deed and hand over possession of the apartment within two months.

This judgment reinforces the protection of homebuyers’ rights within the insolvency framework, ensuring that verified claims are not diluted under the garb of resolution timelines.

It signals a strong judicial reminder that homebuyers, often the most vulnerable stakeholders, cannot be relegated to refund claimants when their investments and rights stand duly recognized within the insolvency process.