Homebuyers Cannot Be Penalised for Administrative Delay — Verified Claims Entitle Possession Under IBC Resolution Plan: Supreme Court

“Once a Homebuyer’s Claim is Verified and Listed by the Resolution Professional, Denial of Possession Is Unjust”, In a crucial ruling safeguarding homebuyer rights under the Insolvency and Bankruptcy Code, 2016 (IBC), the Supreme Court of India on 9th September 2025, allowed an appeal challenging the denial of flat possession despite the buyer’s verified claim being admitted under an approved resolution plan.

The Court held: “Once such verification and incorporation occurred, the claim acquired full legal recognition within the CIRP process. To disregard such an admitted claim and confine the Appellants to the limited benefit under Clause 18.4(xi) is not to preserve the binding effect of the plan but to misapply it.”

The judgment restores faith in the efficacy of the CIRP mechanism for homebuyers, reiterating that once a claim is verified and acknowledged in the creditor list, possession of the allotted unit must follow.

“Homebuyers Who Paid 95% Sale Consideration Cannot Be Branded ‘Belated Claimants’ When Their Claim Was Verified Before Plan Approval”

The case revolved around a flat in the IREO Rise (Gardenia) project, Mohali, developed by M/s Puma Realtors Pvt. Ltd. (Corporate Debtor). The appellants — two Bengaluru-based homebuyers — booked an apartment in 2010, paid ₹57,56,684 out of the total ₹60,06,368, and were promised possession by November 2013. When the builder defaulted, the buyers filed a consumer complaint but later withdrew it when the builder entered CIRP under IBC.

Though they resubmitted their claim to the Resolution Professional (RP) in February 2020, their claim was verified, admitted, and included in the List of Financial Creditors at Serial No. 636 on 30.04.2020.

Still, the NCLT and NCLAT denied them possession and relief, wrongly branding them as “belated claimants” entitled to only 50% refund under Clause 18.4(xi) of the Resolution Plan.

The project’s insolvency began on 17.10.2018, when the NCLT admitted a Section 7 petition against Puma Realtors. The Interim RP issued a public call for claims on 22.10.2018. While the appellants had initially submitted a claim for a plot in another project, they claimed to have submitted their flat claim on 11.01.2019 physically at the Mohali office — though this was disputed.

In an important development, the RP, facing record deficiencies, invited all homebuyers to resubmit claims via email on 31.01.2020. The appellants complied on 07.02.2020, and their claim was officially verified and included by the RP.

Yet, the NCLT (July 2023) and NCLAT (January 2025) both held that since the claim came after the Committee of Creditors had approved the Resolution Plan on 23.08.2019, it fell under Clause 18.4(xi), entitling them only to a 50% refund of principal.

The Apex Court found this reasoning legally flawed and unjust, observing:

“The Appellants cannot be so characterised [as belated claimants], having paid nearly the entire consideration, submitted their claim, and had it duly verified and admitted by the Resolution Professional.”

On the significance of inclusion in the creditors’ list:

“The publication of the list of financial creditors is an act in discharge of a statutory duty by the Resolution Professional. It cannot be reduced to a meaningless formality.”

The Court rejected the argument that only the initial date of claim submission matters, stating that what is critical is verification and incorporation of the claim before the Resolution Plan was approved by the NCLT (which occurred on 01.06.2021). The Committee of Creditors’ prior approval (23.08.2019) was not a cut-off for valid inclusion.

The Court also distinguished between Clause 18.4(xi) and Clause 18.4(vi)(a), noting: “Clause 18.4(xi) applies only where no claim has been filed or verified, or if not informed to the Resolution Applicant. The Appellants' case falls under Clause 18.4(vi)(a), entitling them to possession.”

On the Right to Possession and Homebuyers' Interests

The Court strongly criticized the approach of relegating verified homebuyers to refund categories, warning: “To deny them possession today, despite their claim having been duly verified and admitted, would inflict unfair and unwarranted prejudice.”

The judgment powerfully recognized the vulnerability of homebuyers: “The facts of the present case highlight the plight of individual homebuyers, who invest their life savings in the hope of securing a roof over their heads.”

Quoting from the NCLAT’s earlier precedent in Puneet Kaur v. K.V. Developers, the Bench reiterated that even claims not formally submitted but reflected in the records of the corporate debtor ought to be considered to avoid “inequitable and unfair resolution.”

The Supreme Court allowed the appeal, setting aside the orders of NCLT (26.07.2023) and NCLAT (10.01.2025).

It directed: “Respondent(s) shall execute the Conveyance Deed and hand over possession of Apartment No. GBD-00-001, Block D, IREO Rise (Gardenia), Mohali to the Appellants within a period of two months from today.”

In doing so, the Court reaffirmed that verified and admitted claims must be honored in full, and not diluted on procedural technicalities, especially where homebuyers have already suffered significant delays.

Date of Decision: 09th September 2025