She sought a RERA refund. The NCLAT said she gave up her flat.

Six homebuyers, one cancelled project, and a hard lesson in insolvency

When Mrs. Supriya Singh and five other homebuyers booked flats with M/s Ansal Urban Condominiums Pvt. Ltd., they expected a home. What they got was a refund order from UPRERA, a few partial payments, and eventually, a cancelled allotment in the builder's books. When the builder went into insolvency, they filed claims as creditors. But the Resolution Plan approved by the Committee of Creditors treated them differently — less favourably — than homebuyers whose allotments were still live. The National Company Law Appellate Tribunal, Principal Bench, New Delhi, has now upheld that treatment. The stakes were simple: restoration of their units and equal treatment with other allottees, or acceptance of whatever the Resolution Plan offered. The NCLAT chose the latter.

The story of the flats that never came

The six appellants had each entered into agreements with Ansal Urban Condominiums. The builder never delivered possession. So the homebuyers approached the Uttar Pradesh Real Estate Regulatory Authority, which passed decrees ordering refund of the amounts paid along with interest. The builder's erstwhile management made partial payments towards those decrees. Meanwhile, in the company's records, the units were shown as cancelled.

On March 10, 2022, the NCLT, New Delhi admitted a Section 7 application under the Insolvency and Bankruptcy Code, 2016, and CIRP commenced against the Corporate Debtor. The Resolution Professional admitted the homebuyers' claims under Form-CA — but adjusted the amounts they had already received from the builder. The Information Memorandum reflected the units as cancelled.

The Resolution Professional then placed a Resolution Plan before the Committee of Creditors. At its 12th meeting on August 3, 2023, the CoC approved the plan with a 100% majority. Clause 3.9(11)(C) of that plan provided differential treatment: allottees whose allotments were cancelled got a different (and less favourable) deal than those with valid allotments.

The homebuyers moved an IA before the NCLT, New Delhi, Court-III, seeking amendment of the Information Memorandum and restoration of their units. On August 7, 2024, the NCLT dismissed that application. The homebuyers appealed to the NCLAT.

What each side argued

The homebuyers' counsel argued that the cancellation of their units was unilateral — done by the builder without their consent. They had never agreed to cancellation; they had only sought refund from UPRERA because the builder failed to deliver possession. That, they said, could not be treated as acceptance of cancellation. They relied on Vishal Chelani & Ors. v. Debashish Nanda, (2023) 10 SCC 395, where the Supreme Court held that treating a particular segment of a class of creditors differently because they elected to take back deposits would be highly inequitable. They also sought to distinguish Sunil Chauhan v. Rabindra Kumar Mintri, Company Appeal No. (Ins) 407 of 2023, where the NCLAT had held that an allottee whose allotment was cancelled due to non-payment could only seek refund as per the Resolution Plan.

The Resolution Professional and the Successful Resolution Applicant countered that the homebuyers had themselves approached UPRERA seeking refund of their entire amount. They had accepted partial payments. That conduct, they argued, amounted to acquiescence to the cancellation. The RP had no power to reverse pre-CIRP cancellations — his duty was only to collate and verify claims from the Corporate Debtor's books. The CoC had approved the plan with full majority, and its commercial wisdom was paramount under K. Sashidhar v. Indian Overseas Bank & Ors., Civil Appeal No. 10673 of 2018.

Why the NCLAT upheld the differential treatment

The three-judge bench — Justice Ashok Bhushan, Barun Mitra, and Arun Baroka (author) — dismissed the appeal. The reasoning turned on three key findings.

First: the homebuyers had acquiesced to cancellation

The Bench examined Section 19(4) of the Real Estate (Regulation and Development) Act, 2016, which entitles an allottee to claim refund if the promoter fails to deliver possession. The homebuyers had invoked this provision. They had sought refund of their entire amount along with interest. They had accepted partial payments. The Bench held that this conduct indicated acquiescence to the cancellation. The cancellation could not be characterized as unilateral when the allottees themselves had sought a refund — which is the logical consequence of a cancelled allotment.

THE TEST: If you seek refund from RERA and accept partial payment, you have effectively accepted the cancellation of your allotment. You cannot later claim that the cancellation was unilateral and seek restoration of your unit.

Second: the RP had no power to reverse pre-CIRP cancellations

The Bench held that the Resolution Professional is not an adjudicatory authority. His powers are limited to collating claims and verifying them from the books of the Corporate Debtor. He cannot reverse actions taken by the Corporate Debtor before CIRP commenced. The Information Memorandum correctly reflected the Corporate Debtor's records — the units were shown as cancelled. The RP had no duty — and no power — to go behind those records and restore the allotments.

Third: the CoC's commercial wisdom was paramount

The Bench applied K. Sashidhar and held that where the Information Memorandum correctly reflects the Corporate Debtor's records, and the CoC approves the Resolution Plan with full majority after deliberation, the commercial wisdom of the CoC is paramount. Judicial review is limited to the parameters under Section 31 of the IBC — whether the plan meets the requirements of the Code. The plan here did. The differential treatment of cancelled allottees was a commercial decision, not a legal error.

The Bench distinguished Vishal Chelani on facts. In that case, the units had not been cancelled, and the RP had not admitted the claims in the creditor-in-class category. Here, the units were cancelled, and the claims were admitted in the appropriate category. The Bench also noted that the homebuyers had filed their claims without deducting the amounts already received — a misrepresentation, the Bench observed, though not necessary for the decision.

What this means for homebuyers and insolvency practitioners

This judgment is a reality check for homebuyers who find themselves in insolvency proceedings. The key takeaway is that conduct matters. If you approach RERA for a refund and accept partial payment, you cannot later argue that your allotment was never cancelled. The insolvency process will treat you as a cancelled allottee, and the Resolution Plan can lawfully give you less than what other homebuyers get.

For Resolution Professionals, the judgment confirms that their role is limited. They are not courts. They cannot reverse pre-CIRP cancellations. Their duty is to verify claims from the Corporate Debtor's books and collate them correctly. If the books show cancellation, the Information Memorandum must reflect that.

For Successful Resolution Applicants, the judgment reinforces the sanctity of the CoC's commercial wisdom. A plan approved with full majority, based on correct information, will not be disturbed lightly. The courts will not rewrite commercial bargains.

For advocates advising homebuyers, the lesson is clear: if your client has sought a refund from RERA, do not expect the insolvency process to restore their unit. The better strategy may be to negotiate within the Resolution Plan framework rather than challenge the cancellation itself.

The bottom line

If you seek refund from RERA and accept partial payment, you have effectively accepted cancellation of your allotment — and the insolvency process will treat you as a cancelled allottee, with no right to restoration and no claim to equal treatment with live allottees.