In a powerful affirmation of homebuyer rights, the Supreme Court has delivered a crucial ruling, declaring that once a claim is verified and admitted by a Resolution Professional (RP), it cannot be used to deny a homebuyer possession of their flat. The ruling brings major relief to financial creditors, ensuring that verified claims cannot be arbitrarily sidelined even if there was some delay in filing.

Siding with the homebuyers, the Supreme Court bench of Justice Sanjay Kumar and Justice Satish Chandra Sharma held that once a claim has been verified and admitted, it cannot later be downgraded as ‘unverified.’ The judges found it unjust to deny the homebuyers possession of their flats and confine them to a partial refund, particularly when they had already paid a substantial amount and their claims had been duly recognized.

FACTS:

The case involved a group of homebuyers who had booked their apartment back in 2010. They had already paid nearly the entire amount of ₹57.56 lakh out of ₹60.06 lakh well in advance. But when the developer defaulted, they were left stuck in insolvency proceedings that began in 2018.

Initially, their claim met resistance from the Resolution Professional. However, after being asked to resubmit their claim in early 2020, they did so. In April 2020, their claim was officially verified and included in the RP’s list of financial creditors a year before the resolution plan was even approved by the National Company Law Tribunal (NCLT).

Despite this, when the resolution plan was implemented, the Resolution Applicant refused to hand over possession. Instead, the homebuyers were pushed into a “residuary clause” meant only for unverified claims, making them eligible for just a partial refund. Both the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) upheld this treatment, leaving the homebuyers to approach the Supreme Court.

The Supreme Court, in a judgment written by Justice Satish Chandra Sharma, came down firmly on the side of the homebuyers. The Court called out the basic unfairness of what had happened, making it clear that the lower authorities were wrong to sideline a claim that had already been checked and admitted. Once a claim has gone through the process and been verified, the Court stressed, it isn’t something that can simply be brushed away.

In the words of the court,“What is critical to note is that this is not a case of entertaining a fresh claim beyond the Resolution Plan. It concerns an allottee whose claim was verified and admitted by the Resolution Professional and reflected in the list of financial creditors well before approval of the Plan by the Adjudicating Authority. 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. Relegating bona fide allottees, who have paid substantial consideration years in advance, to the status of mere refund claimants runs contrary to the very object of the legislative framework…To deny them possession today, despite their claim having been duly verified and admitted, would inflict unfair and unwarranted prejudice.”

Additionally, the court stated, “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. The Appellants had paid nearly the entire sale consideration as far back as 2011. To deny them possession today, despite their claim having been duly verified and admitted, would inflict unfair and unwarranted prejudice.”

Ultimately, the appeal was granted, and the Resolution Applicant was ordered to execute the conveyance deed and hand over possession of the flat to the appellants within two months.

CASE TITLE: AMIT NEHRA & ANR. VERSUS PAWAN KUMAR GARG & ORS.

For Appellant(s): Mr. Aditya Wadhwa, Adv. Ms. Sonal Sarda, Adv. Ms. Noyonika Deori, Adv. Mr. R. Ilam Paridi, AOR Mr. Aman Kumar, Adv. Mr. R. Vishnu Kumar, Adv. Mr. Saurav Beniwal, Adv. Mr. Sidhant Verma, Adv. Ms. Mansi Vats, Adv.

For Respondent(s): Mr. Vaibhav Mishra, AOR Ms. Anuja Pethia, AOR Mr. Noor Shergill, Adv. Mr. Rishabh Govila, Adv. Mr. Rishabh Nigam, Adv. Mr. Himanshu Gupta, Adv. Mr. Manoj C. Mishra, AOR