Tribunal rules that amount paid by allottee for commercial unit in real estate project constitutes financial debt; applicants declared genuine allottees, not speculative investors, under Section 5(8)(f) of Insolvency and Bankruptcy Code, 2016
In a significant judgment dated October 12, 2026, the National Company Law Tribunal (NCLT), Mumbai Bench, presided over by Judicial Member Sh. Vinay Goel and Technical Member Sh. Charanjeet Singh Gulati, held that the amount paid by allottees for the allotment of a commercial shop in a real estate project is a financial debt under the Insolvency and Bankruptcy Code (IBC), 2016. The tribunal adjudicated the claim of Harender Nihalani and another (Applicants) against Manish Dawda, the Resolution Professional (Respondent) of M/s. Wadhwa Buildcon LLP (Corporate Debtor).
The applicants had entered into an Agreement for Sale dated January 9, 2018, for Shop No. 11 in the "Wadhwa Regalia" project, a commercial real estate development. Though initially claiming Rs. 5.27 crores, the applicants restricted their claim to Rs. 1.47 crores, the amount actually received by the Corporate Debtor. The NCLT observed that the receipt of Rs. 1.47 crores by the Corporate Debtor, as recorded in the Agreement for Sale executed by the Corporate Debtor itself as Promoter No. 1, was undisputed.
The tribunal examined whether the applicants qualify as financial creditors under Section 5(8)(f) of the IBC, which defines "financial debt" to include amounts raised under transactions having the commercial effect of borrowing, including amounts raised from allottees under real estate projects as per the Real Estate (Regulation and Development) Act (RERA), 2016. The tribunal observed that Section 5(8)(f) and the relevant RERA provisions do not confine the definition to residential units or the term "homebuyer." Therefore, allottees of commercial shops are covered.
A critical aspect addressed was whether the applicants were genuine allottees or speculative investors. The tribunal applied the Supreme Court's test laid down in Mansi Brar Fernandes v. Shubha Sharma (2025), considering factors such as the nature of contract, number of units purchased, absence of assured returns or buyback clauses, and stage of project completion. The applicants had purchased only one shop under a standard agreement with no assured returns or buyback arrangement and had invested at an early stage with the intention of taking possession after completion. Hence, they were found to be genuine allottees.
Based on these findings, the tribunal directed the Respondent Resolution Professional to admit the applicants' claim of Rs. 1.47 crores as financial creditors in the class of allottees after due verification, thereby ensuring their inclusion in the Committee of Creditors (CoC) in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor.
This judgment reinforces the principle that genuine allottees of commercial units in real estate projects have the status of financial creditors under the IBC, safeguarding their interests in insolvency proceedings. It also clarifies that speculative investors cannot misuse the Code, consistent with the Supreme Court's recent jurisprudence.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Amount paid for allotment of a commercial shop in a real estate project is a financial debt under Section 5(8)(f) - Allottee of commercial unit is also covered under RERA definitions - In absence of features showing speculative investment, such allottee is to be treated as a financial creditor in class of allottees - Claim restricted to admitted amount actually received by Corporate Debtor.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 5(8)(f), Section 60(5); Real Estate (Regulation and Development) Act, 2016 Sections 2(d), 2(zn); Negotiable Instruments Act, 1881 Section 138
Harender Nihalani v. Manish Dawda, (NCLT)(Mumbai Bench) : Law Finder Doc Id # 3004081
