Tribunal upholds Committee of Creditors’ commercial wisdom; dismisses homebuyers’ plea for individual refunds under RERA in Spenta Enclave’s CIRP
In a significant judgment delivered on September 9, 2026, the National Company Law Tribunal (NCLT), Mumbai Bench, in the matter of Vivek Talwar and Ors. vs Rajesh Jhunjhunwala, Resolution Professional and Ors., clarified the supremacy of the Insolvency and Bankruptcy Code, 2016 (IBC) over the Real Estate (Regulation and Development) Act, 2016 (RERA) in cases of conflict during corporate insolvency resolution processes (CIRP).
The case arose when homebuyers who had booked flats in the “Altavista” project developed by Spenta Enclave Private Limited — the Corporate Debtor (CD) — sought refund of substantial amounts paid (approximately Rs. 89.23 lakh and Rs. 86.71 lakh respectively) for undelivered flats. These homebuyers, despite prior attempts for refund under Section 18 of RERA and before consumer fora, challenged the Resolution Plan approved by the Committee of Creditors (CoC), alleging that the Plan failed to honor their refund rights and violated RERA provisions.
The Tribunal, presided over by Mr. Anil Raj Chellan (Technical Member) and Mr. K. R. Saji Kumar (Judicial Member), meticulously examined the interplay between the IBC and RERA. It was held that under Section 238 of the IBC, provisions of the Insolvency Code override any inconsistent provisions of other laws, including RERA. Consequently, while RERA protects individual homebuyers’ rights to refunds in normal circumstances, once a CIRP commences, the homebuyers’ claims become subject to the collective resolution framework under the IBC.
The Tribunal observed that the Resolution Applicant (Successful Resolution Applicant - SRA) does not immediately assume the role of the promoter or developer under RERA until the Resolution Plan is approved by the Adjudicating Authority. Therefore, the SRA is not bound by pre-existing contractual obligations such as refund clauses under the Agreement for Sale or Section 18 of RERA at the CIRP stage. The commercial wisdom exercised by the CoC, which included homebuyers as a class of financial creditors holding a combined 22.66% voting share, was paramount and binding on individual homebuyers holding minimal voting shares. The CoC had approved the Resolution Plan with an overwhelming 92.87% majority.
Further, the Tribunal rejected the homebuyers’ plea on grounds of res judicata, noting that earlier applications seeking refunds on similar issues had been dismissed by the Tribunal and those orders had attained finality.
The decision reinforces that during insolvency proceedings, individual claims of homebuyers are subsumed under the collective decision-making process. The Tribunal declined to interfere with the approved Resolution Plan or direct reconsideration or modification to provide individual refund mechanisms as sought by the homebuyers. It emphasized that allowing individual refunds at the CIRP stage would undermine the collective insolvency resolution process designed to balance interests of all stakeholders.
In summary, the NCLT Mumbai’s ruling establishes that while RERA protects homebuyers in normal times, during insolvency proceedings under IBC, the collective resolution process takes precedence. Homebuyers must abide by the commercial decisions of the CoC and cannot claim individualized remedies outside the IBC framework.
Bottom Line:
Insolvency and Bankruptcy Code (IBC) overrides Real Estate (Regulation and Development) Act (RERA) in case of inconsistency, and homebuyers' claims are subject to collective resolution under the IBC framework.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 18, 25A(3A), 30(2), 60(5), 238; Real Estate (Regulation and Development) Act, 2016 Section 18
Vivek Talwar v. Rajesh Jhunjhunwala, (NCLT)(Mumbai) : Law Finder Doc Id # 2975805
