08th April, 2026 Report of the Committee on Framing Guidelines for Insolvency Proceedings in Real Estate Sector (2.24 MB)

Report of the Committee on Framing Guidelines for Insolvency Proceedings in

Report of the Committee on Framing Guidelines for Insolvency Proceedings in Real Estate Sector

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA April 2026

Date: 7th April 2026 To Shri Ravi Mital Chairperson Insolvency and Bankruptcy Board oflndia 7th Floor, Mayur Bhawan, Shankar Market Connaught Circus New Delhi - 110001 Dear Sir, It is our privilege to submit the Report of the Committee constituted by the Insolvency and Bankruptcy Board oflndia (IBBI) pursuant to the directions of the Hon'ble Supreme Comt in Mansi Brar Fernandes v. Shubha Sharma & Anr., to examine the issues arising in the conduct of insolvency resolution processes involving real estate projects under the Insolvency and Bankruptcy Code, 2016 (Code). 2. The Committee was mandated to analyse sector-specific challenges in real estate insolvency, particularly those affecting homebuyers, resolution applicants, regulators and creditors, and to recommend measures to strengthen the effective implementation of the Code.

in real estate insolvency, particularly those affecting homebuyers, resolution applicants, regulators and creditors, and to recommend measures to strengthen the effective implementation of the Code. In this Report, the Committee sets out its analysis and recommendations on the structural, procedural and institutional aspects of insolvency proceedings in the real estate sector, with a view to improve coherence, efficiency, and outcomes for all stakeholders under the Code. 3. In carrying out its mandate, the Committee engaged extensively with a wide range of stakeholders, including Central Ministries, State Real Estate Regulatory Authorities (RERAs ), land development authorities, industry bodies, homebuyer associations, Government-backed funds, insolvency professionals and former members of the adjudicating authority, viz., National Company Law Tribunal. The Committee also considered judicial pronouncements and practical experience from real estate insolvency cases. 4. The Committee has approached its task with due regard to the core principles of the Code, including time-bound resolution, value maximisation and respect for the commercial wisdom of creditors, and has focused on clarifications, process improvements and best practices.

ciples of the Code, including time-bound resolution, value maximisation and respect for the commercial wisdom of creditors, and has focused on clarifications, process improvements and best practices. The Committee has given 155 specific recommendations on 55 broad issues identified during the course of its deliberations and firmly believes that, if implemented, these will contribute to greater consistency, predictability, efficiency, and effectiveness in real estate insolvency resolution, while strengthening confidence among homebuyers, creditors, and investors. We place this Report for consideration and further action by various stakeholders, as deemed appropriate.
Ku dip Narayan Member CJrai Dr. Ravinder N. Batta Member Yours sincerely, ..::rƛ"-V'l'"lV\ Ɯ" Ɲ ƞ 'Jayanti Prasad Chairperson s-.,  Denning Babu Member Chandan I.mar Singh Member Mem 1 Vais ngh Member if,/'< Ashish Du bey Member

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'Jayanti Prasad Chairperson s-.,  Denning Babu Member Chandan I.mar Singh Member Mem 1 Vais ngh Member if,/'< Ashish Du bey Member

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TABLE OF CONTENTS Page No. PREFACE ................................................................................................................................. 1 ACKNOWLEDGMENT ......................................................................................................... 4 EXECUTIVE SUMMARY ..................................................................................................... 6 CHAPTER I: INTRODUCTION ......................................................................................... 17 Background .......................................................................................................................... 17 Composition of the Committee ............................................................................................ 19 Scope of Committee’s work ................................................................................................. 19 CHAPTER II: REAL ESTATE INSOLVENCY: OVERVIEW AND ISSUES .............. 21 Sector profile ........................................................................................................................ 21 Volume and distribution of real estate insolvency cases .................................................. 22 Legal framework and jurisprudence .....................................................................................

estate insolvency cases .................................................. 22 Legal framework and jurisprudence ..................................................................................... 23 Framework under IBC and Regulatory interventions....................................................... 23 Jurisprudence on real estate issues ................................................................................... 26 Report of the Committee to examine the issues related to Legacy Stalled Real Estate Projects .............................................................................................................................................. 40 CHAPTER III: ISSUES, ANALYSIS AND RECOMMENDATIONS ............................ 43 A. Core Objective of Real Estate Insolvency ....................................................................... 43 A1. Priority to Project Resolution over Liquidation in Real Estate Insolvency ............... 43 B. Homebuyers – Differential treatment based on intent ..................................................... 46 B1. Distinguishing “Genuine” Homebuyers from “Speculative” Investors and Protection of Homebuyers ................................................................................................................. 46 C. RERA–IBC Coordination and Regulatory Alignment .................................................... 50 C1. Strengthening Synergy and Coordination between RERA and the IBC Framework 50 C2.

.. 46 C. RERA–IBC Coordination and Regulatory Alignment .................................................... 50 C1. Strengthening Synergy and Coordination between RERA and the IBC Framework 50 C2. Uniformity and Harmonisation of RERA Rules and Standard Operating Procedures across States ...................................................................................................................... 53 D. Project-Wise Insolvency Framework .............................................................................. 56 D1. Project-Wise Admission of Corporate Insolvency Resolution Process in Real Estate .......................................................................................................................................... 56 D2. Exclusion of Completed or Occupied Projects from CIRP ....................................... 61 D3. Ring-Fencing of assets and cash flows in Real Estate Insolvency ............................ 65 E. Possession, Refunds and Allottee Choice ........................................................................ 68 E1. Possession of Substantially Completed Units during CIRP ....................................... 68 E2. Classification of Homebuyers Based on Relief Sought ............................................. 72 E3. Allottee Choice in resolution plan –Possession or Refund ........................................ 74

cation of Homebuyers Based on Relief Sought ............................................. 72 E3. Allottee Choice in resolution plan –Possession or Refund ........................................ 74

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F. Admission Thresholds and Initiation of CIRP ................................................................. 75 F1. Threshold for Initiating Real Estate CIRP ................................................................. 75 F2. Speculative or Junior Stakeholders Triggering CIRP ................................................ 77 G. Claims Management and Information Integrity .............................................................. 80 G1. Uniform Date of Default for Homebuyers................................................................. 80 G2. Cut-off Dates and Treatment of Belated Claims ....................................................... 81 G3. Priority of RERA Records in case of inconsistency .................................................. 83 G4. Automatic admission of claims reflected in records .................................................. 84 G5. Simplified homebuyers claim processes .................................................................... 86 G6. Treatment of claims of Banks and diversion of project funds ................................... 87 H. Land Authority-Related Issues ........................................................................................ 89 H1. Landowner Rights and Joint Development Agreements (JDAs) ............................... 89 H2.

ssues ........................................................................................ 89 H1. Landowner Rights and Joint Development Agreements (JDAs) ............................... 89 H2. Finality of dues of Development Authorities ............................................................ 90 H3. Participation of Land-Owning and Development Authorities in the Resolution Process .......................................................................................................................................... 91 I. Slum rehabilitation issues ................................................................................................. 93 I1. Treatment of Slum Dwellers in Real Estate Insolvency ............................................. 93 I2. Mandatory Inclusion of Slum Rehabilitation Authorities and Slum Dweller Representatives ................................................................................................................. 95 J. Authorised Representatives and Homebuyer Participation .............................................. 96 J1. Strengthening Independence and Accountability of Authorised Representatives (ARs) .......................................................................................................................................... 96 J2. Facilitation and Legal Awareness for Homebuyers in Real Estate Insolvency .......... 99 K. Resolution Professionals and Process Governance ....................................................... 101 K1.

itation and Legal Awareness for Homebuyers in Real Estate Insolvency .......... 99 K. Resolution Professionals and Process Governance ....................................................... 101 K1. Project-Specific Resolution Professionals and Project-Level Oversight ................. 101 K2. Operational Autonomy of Resolution Professionals ............................................... 103 K3. Professional Standards and Capacity of Insolvency Professionals for Real Estate Insolvency ....................................................................................................................... 105 L. Timelines, Planning and Monitoring ............................................................................. 108 L1. Real Estate–Specific CIRP Timelines ...................................................................... 108 L2. Independent Technical and Cost Assessment .......................................................... 110 L3. Project Monitoring Committees (PMCs) ................................................................. 112 L4. Clear Definition of Plan Implementation ................................................................. 114 M. CoC Functioning and Voting ........................................................................................ 117 M1. Time-Bound Decision-Making by the Committee of Creditors ............................. 117 M2. Treatment of Non-Responsive Homebuyer-Voters ................................................ 119

M1. Time-Bound Decision-Making by the Committee of Creditors ............................. 117 M2. Treatment of Non-Responsive Homebuyer-Voters ................................................ 119

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M3. Transparency and Audit trail of the proceedings of the Committee of Creditors ... 122 N. Funding and Revival Mechanisms ................................................................................ 124 N1. Encouraging Interim Finance in Real Estate Insolvency ......................................... 124 N2. Government-Backed Bridge Funding ...................................................................... 126 N3. Treatment of Operational Creditors in SWAMIH-Funded Real Estate Projects ..... 129 N4. Fund for Homebuyer Litigation Support ................................................................. 131 O. Resolution Applicants and Market Participation........................................................... 133 O1. Homebuyer-Led Resolution Plans ........................................................................... 133 O2. Participation of Public Sector Undertakings as Resolution Applicants................... 135 P. Reverse CIRP ................................................................................................................. 137 P1. Reverse CIRP in Real Estate Insolvency ................................................................. 137 Q. Institutional and Structural Reforms ............................................................................. 140 Q1.

y ................................................................. 137 Q. Institutional and Structural Reforms ............................................................................. 140 Q1. Specialised Adjudication for Real Estate Insolvency Matters ................................. 140 Q2. Role of Information Utility in Real Estate Insolvency ............................................ 143 Q3. Immunity from Past Liabilities (“Clean Slate”) in Real Estate Resolution ............. 145 Q4. Regulatory Fee Computation in Real Estate CIRPs ................................................ 148 Q5. Evidentiary Status of Corporate Debtor Records .................................................... 149 Q6. Coordination with Local Development Authorities (NOIDA, GNIDA, etc.) ......... 150 Q7. Post-Resolution Monitoring by RERA .................................................................... 153 Q8. Reset of Construction Timelines Post-Resolution ................................................... 155 Q9. Framework for Non-Cooperative Homebuyers ....................................................... 157 Q10. Digital Transparency and Institutional Capacity for Monitoring Real Estate Resolution ....................................................................................................................... 158 Q11. Moratorium on Home Loan Instalments Payable by Homebuyers during CIRP .. 159 Q12. RERA as Primary Mechanism for Resolution of Stalled Real Estate Projects ..... 162 Q13.

................. 158 Q11. Moratorium on Home Loan Instalments Payable by Homebuyers during CIRP .. 159 Q12. RERA as Primary Mechanism for Resolution of Stalled Real Estate Projects ..... 162 Q13. Regulation of Fees of Resolution Professionals in Real Estate cases ................... 163 CHAPTER IV: SUMMARY OF RECOMMENDATIONS ............................................ 166 LIST OF ABBREVIATIONS ............................................................................................. 177 ANNEXURES ....................................................................................................................... 179 Annexure A: Extract of the Supreme Court Order in the matter of Mansi Brar Fernandes v. Shubha Sharma & Ors. (Civil Appeal No. 3826 of 2020) ................................................ 179 Annexure B: Members of the Committee .......................................................................... 183 Annexure C: Recommendations of the Amitabh Kant Committee Report ........................ 184

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............................................ 183 Annexure C: Recommendations of the Amitabh Kant Committee Report ........................ 184

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Report of the Committee on Framing Guidelines for Insolvency Proceedings in Real Estate Sector

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PREFACE 1. The real estate sector occupies a distinctive and complex status within the insolvency framework under the Insolvency and Bankruptcy Code, 2016 (Code/ IBC). Unlike most other sectors, real estate insolvency directly affects the interests of a large and diverse class of non- institutional stakeholders – the homebuyers - whose primary expectation is not financial recovery but the timely completion of their projects and delivery of homes to them. Over nearly a decade of experience with the Code, it has become evident that the conventional, entity- centric corporate insolvency resolution process, when applied without adequate sectoral nuance, often struggles to address the structural, regulatory, and social dimensions inherent in real estate projects.

Since the enactment of the Code and the Real Estate (Regulation and Development) Act in 2016, India’s insolvency and real estate regulatory landscape has undergone a significant transformation. The recognition of homebuyers as the financial creditors (FCs) through the 2018 amendment to the Code marked a fundamental shift, acknowledging that the life savings of millions of Indian households function as a critical source of project finance.

itors (FCs) through the 2018 amendment to the Code marked a fundamental shift, acknowledging that the life savings of millions of Indian households function as a critical source of project finance. While the Code has brought several distressed real estate projects within a structured resolution framework and has enabled resolution in a number of cases, several real estate insolvency proceedings continue to linger. Prolonged timelines, multi-project development structures, conflicts between regulatory regimes, and coordination challenges among land authorities, financial institutions, and regulators have frequently resulted in value erosion rather than value preservation, leaving homebuyers trapped in uncertainty for long durations and causing them severe stress.

Against this backdrop, the Hon’ble Supreme Court of India, in its judgment dated 12 September 2025 in the matter of Mansi Brar Fernandes v. Shubha Sharma & Ors., issued a series of significant directions and suggestions aimed at setting in place a completion-centric and homebuyer-focused approach to insolvency proceedings in the real estate sector.

& Ors., issued a series of significant directions and suggestions aimed at setting in place a completion-centric and homebuyer-focused approach to insolvency proceedings in the real estate sector. Recognising that real estate constitutes one of the largest categories of cases under the Code, the Hon’ble Supreme Court directed the Insolvency and Bankruptcy Board of India (IBBI), in consultation with Real Estate Regulatory Authorities (RERA Authorities), to constitute a council to frame sector-specific guidelines for real estate insolvency, including timelines for project-wise corporate insolvency resolution processes and safeguards for allottees. The present Committee was constituted by the IBBI pursuant to these directions.

The Committee was entrusted with examining the challenges encountered in real estate insolvency proceedings, assessing the adequacy of the existing legal and regulatory framework, and recommending measures to align insolvency processes with the objectives articulated by the Hon’ble Supreme Court - namely, protection of the interests of the genuine homebuyers, completion of viable projects, harmonisation between the IBC and RERA frameworks, and avoidance of value-destructive outcomes such as indiscriminate liquidation. The Committee’s assessment underscores that the conventional insolvency paradigm, focused primarily on recovery and redistribution, must evolve in the real estate context towards a completion-

on. The Committee’s assessment underscores that the conventional insolvency paradigm, focused primarily on recovery and redistribution, must evolve in the real estate context towards a completion-

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oriented framework that recognises the project-specific nature of development and the socio- economic vulnerability of homebuyers.

In discharging its mandate, the Committee adopted a consultative, evidence-based approach. Multiple meetings were held during which members deliberated on systemic issues arising in real estate insolvency cases. The Committee examined empirical data on the status of real estate insolvency proceedings, reviewed judicial precedents, and analysed recurring causes of delay and litigation. Extensive stakeholder consultations were undertaken with representatives from Central Ministries, RERA authorities, land development authorities, financial institutions, insolvency professionals, Adjudicating Authorities (Judges), industry associations, public sector funding entities, successful resolution applicants and professionals/ experts in the real estate domain. Importantly, the Committee also heard and deliberated with the representatives of homebuyer associations from several long-pending projects, whose first- hand accounts highlighted the social costs of prolonged insolvency proceedings.

deliberated with the representatives of homebuyer associations from several long-pending projects, whose first- hand accounts highlighted the social costs of prolonged insolvency proceedings.

These consultations revealed areas of broad consensus - such as the need for project- wise admission and resolution, exclusion of completed projects of the CD from insolvency, stronger coordination between RERA and insolvency processes under the Code, and prioritisation of project completion as well as areas of divergence, including the role of promoters, treatment of belated claims, and treatment of non-cooperative stakeholders. The Committee has sought to faithfully reflect these perspectives in its analysis, while grounding its recommendations firmly in statutory principles, judicial guidance and practical feasibility.

This Report is confined to the mandate entrusted to the Committee by the Hon’ble Supreme Court, namely, the framing of guidelines for insolvency proceedings in the real estate sector. The Report does not seek to disturb the foundational principles or overall architecture of the Code. While the Committee has, where considered necessary, suggested certain targeted legislative and regulatory refinements, these are intended to strengthen the effective operation of the framework in the specific context of real estate insolvency.

sary, suggested certain targeted legislative and regulatory refinements, these are intended to strengthen the effective operation of the framework in the specific context of real estate insolvency. Wherever structural constraints have been identified, the Committee has sought to propose calibrated measures - whether legislative, regulatory, or procedural -that remain consistent with the objectives of the Code and promote greater clarity, efficiency and stakeholder balance. The Committee’s examination and recommendations are primarily focused on the residential real estate segment, which accounts for the overwhelming majority of real estate insolvency cases and involves heightened public interest considerations, given the direct impact on individual homebuyers’ savings and housing security.

The Committee is conscious of the inherent limitations of a straitjacket approach in a sector as diverse and fact sensitive as real estate. Projects vary widely in scale, financing models, regulatory environments, and stages of completion. Accordingly, the recommendations contained in this Report are intended to provide principled guidance and process clarity, rather than rigid or one-size-fits-all prescriptions. The Committee also recognises that evolving market conditions, judicial developments, and regulatory reforms may necessitate future review and refinement.

rigid or one-size-fits-all prescriptions. The Committee also recognises that evolving market conditions, judicial developments, and regulatory reforms may necessitate future review and refinement.

Page 3 of 191 9. This Report represents the Committee’s collective assessment of how insolvency proceedings in the real estate sector can be made more effective, predictable, efficient and humane - shifting the emphasis from mere recovery to meaningful completion. The Committee submits this Report in the hope that its recommendations will contribute to a more credible, completion-oriented, and stakeholder-balanced insolvency framework, capable of strengthening confidence among homebuyers and advancing the broader objectives of economic growth and housing security. (Jayanti Prasad) Chairperson Committee on Real Estate Issues and Whole Time Member Insolvency and Bankruptcy Board of India

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ACKNOWLEDGMENT 1. I would like to express my profound gratitude to all the esteemed members of the Committee whose collective experience across insolvency regulation, housing and urban development, corporate law and real estate regulation significantly enriched the Committee’s work. The Committee benefited from the policy perspectives of Mr. Kuldip Narayan, Joint Secretary, Ministry of Housing and Urban Affairs, particularly on urban development and housing-sector issues, and from the corporate and insolvency law insights of Mr. Denning Babu, Joint Director, Ministry of Corporate Affairs. The Committee also acknowledges the valuable contributions of Ms.

ctor issues, and from the corporate and insolvency law insights of Mr. Denning Babu, Joint Director, Ministry of Corporate Affairs. The Committee also acknowledges the valuable contributions of Ms. Vaishali Singh, Administrator, Haryana Shahari Vikas Pradhikaran, who brought the perspective of development authorities and land-owning agencies. The pan-India regulatory experience of Dr. Ravinder N. Bhatta, Chief Executive Officer, All India Forum of Real Estate Regulatory Authorities, provided important inputs on harmonisation between the Code and the RERA framework. The Committee further benefited from the practical regulatory insights of Mr. Chandan Kumar Singh, Legal Adviser, RERA Uttar Pradesh; Mr. Ashish Dubey, RERA Haryana (Gurugram), and Mr. Piyush Arora, RERA Haryana (Gurugram); particularly on project-level implementation, homebuyer issues and regulatory coordination. The Committee further acknowledges the contribution of Mr. Jithesh John, Executive Director, IBBI, whose experience in insolvency regulation and institutional processes supported the Committee’s deliberations.

The Committee places on record its appreciation for the participation of external invitees who shared their experience, practical insights and professional perspectives, thereby enriching the Committee’s understanding of real estate insolvency from multiple viewpoints. The Committee acknowledges the valuable inputs of former Members of the National Company Law Tribunal (NCLT) - Mr. Avinash Srivastava and Mr. L. N.

real estate insolvency from multiple viewpoints. The Committee acknowledges the valuable inputs of former Members of the National Company Law Tribunal (NCLT) - Mr. Avinash Srivastava and Mr. L. N. Gupta—whose judicial experience provided important guidance on adjudicatory trends, procedural challenges and the lessons from the practical application of the Code in real estate matters.

The Committee also benefited from the insights of experts and practitioners, including Dr. Ashok Haldia, Former Chairman, Indian Institute of Insolvency Professionals of ICAI, and Mr. Sumant Batra, President, Insolvency Law Academy and a leading Legal Counsel in the insolvency field, who shared their perspectives on systemic issues, jurisprudence and best practices. The views of industry representatives were articulated by Mr. Getamber Anand, Mr. Apoorv Jain and Mr. Ishaan Bhatia of CREDAI, who highlighted developer-side perspectives and market realities. The Committee acknowledges the contribution of Mr. Abdul Kader Suriya, Chief Investment Officer, SWAMIH Fund, whose inputs on government-backed completion funding and project revival were particularly valuable. The Committee also thanks Mr. Haseeth Bathiya, Legal Member, NAREDCO, for his views on industry practices and regulatory coordination.

The Committee also places on record its sincere appreciation for the valuable inputs received from senior officers from the Stressed Assets Resolution Group of State Bank of India, Mr. Arun Kumar Yadav, Chief General Manager and Mr. H.K.P. Karimi, Deputy General

he valuable inputs received from senior officers from the Stressed Assets Resolution Group of State Bank of India, Mr. Arun Kumar Yadav, Chief General Manager and Mr. H.K.P. Karimi, Deputy General

Page 5 of 191 Manager, who provided critical insights on lender behaviour, interim finance and creditor decision-making in large real estate insolvencies. The Committee further acknowledges the contribution of Resolution Professionals Mr. Jayesh Sanghrajka and Mr. A. V. Sarma who shared practitioner perspectives on managing complex real estate CIRPs. The Committee also benefited from the insights of successful resolution applicants, including Mr. Sanjeev Ailawadi of Max Estates Limited and Mr. Saransh Dey of the Mantra Group, who provided detailed accounts of bidding, implementation and post-approval execution issues in resolved real estate projects.
5. The perspectives of homebuyers were effectively represented through the participation of Mr. Vishwanath Sharma, President, Lotus Arena Buyers Association; Mr. Ashish Mohan Gupta, President, Jaypee Real Estate Allottees Welfare Society; Mr. Ishwar Kewalramani, Vice President, Jaypee Real Estate Allottees Welfare Society; and Ms. Rashmi Singhal, Secretary, Jaypee Real Estate Allottees Welfare Society. Their inputs ensured that the lived experiences and concerns of allottees remained central to the Committee’s deliberations. 6. This Report has been made possible due to the unstinted support, dedication, and expertise of the members of the IBBI team led by Mr.

f allottees remained central to the Committee’s deliberations. 6. This Report has been made possible due to the unstinted support, dedication, and expertise of the members of the IBBI team led by Mr. Rajesh Tiwari, General Manager, Ms. Medha Shekar, Assistant General Manager, ably supported by Ms. Muskan, Research Associate, IBBI who did an exceptional job of managing the meetings and consultations of the Committee and also in providing substantive research and drafting support to the Committee. 7. The Committee acknowledges that the collective contributions of all participants were instrumental in enabling a comprehensive examination of the issues relating to real estate insolvency and in shaping the findings and recommendations set out in this Report. (Jayanti Prasad) Chairperson Committee on Real Estate Issues and Whole Time Member Insolvency and Bankruptcy Board of India

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EXECUTIVE SUMMARY 1. Nearly a decade after the enactment of the IBC and the RERA Act, India’s framework for addressing distress in the real estate sector stands at a decisive crossroads. While these legislations have individually introduced transparency, debtor discipline and consumer protection, experience has demonstrated that the insolvency of real estate enterprises presents challenges fundamentally distinct from those encountered in other sectors.

or discipline and consumer protection, experience has demonstrated that the insolvency of real estate enterprises presents challenges fundamentally distinct from those encountered in other sectors. Real estate insolvency is not confined to financial restructuring; it directly implicates and impacts the housing security of millions of individual homebuyers whose primary expectation is delivery of homes rather than monetary recovery.

Judicial evolution under the IBC has progressively recognised this uniqueness. The classification of homebuyers as the Financial Creditors (FCs) marked a paradigm shift, acknowledging the commercial reality that homebuyer funds function as project finance. Subsequent jurisprudence has sought to reconcile insolvency principles with project completion imperatives through project-specific resolution approaches and court-monitored completion frameworks, and safeguards against speculative misuse of insolvency remedies. However, these adaptations have largely emerged through case-by-case judicial innovation rather than a settled normative framework, resulting in uneven and delayed outcomes and persistent uncertainty.

This Report responds to the directions of the Hon’ble Supreme Court in Mansi Brar Fernandes v. Shubha Sharma & Ors., which called for sector-specific guidelines to put in place a completion-centric and homebuyer-sensitive insolvency regime.

he Hon’ble Supreme Court in Mansi Brar Fernandes v. Shubha Sharma & Ors., which called for sector-specific guidelines to put in place a completion-centric and homebuyer-sensitive insolvency regime. The Committee’s mandate was to examine systemic bottlenecks in real estate insolvency, assess the adequacy of existing legal and regulatory mechanisms, and recommend measures that align insolvency processes with economic reality, regulatory coherence, and constitutional values.

The Committee’s examination of insolvency data reveals that the real estate sector constitutes one of the largest and most complex segments within the insolvency ecosystem. Hundreds of real estate cases have been admitted since the Code’s inception. A large proportion of these cases have been closed through resolution, settlement, review, withdrawal and liquidation. However, several cases are still ongoing.

The consequences of this stagnation are profound. Ongoing and resolved insolvency cases together affect nearly a quarter of a million homebuyers, translating into housing insecurity for close to a million individuals when household size is considered. For these stakeholders, insolvency is not an abstract legal process, but a prolonged period of uncertainty marked by continued rental burdens, loan servicing without possession, and erosion of trust in institutional mechanisms. The Committee therefore approaches insolvency reform in real estate not merely as a commercial necessity but as a matter of public interest.

sion, and erosion of trust in institutional mechanisms. The Committee therefore approaches insolvency reform in real estate not merely as a commercial necessity but as a matter of public interest.

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Core structural issues identified by the Committee

The Committee has identified 55 critical issues, discussed in detail in Chapter 3 of this Report, which constitute the primary bottlenecks in the resolution of real estate projects. Some of the significant ones are mentioned as follows:

6.1. Fragmented project structures and multi-entity arrangements

6.1.1. Real estate projects are frequently structured through special purpose vehicles (SPVs), with land ownership, development rights, and financing distributed across multiple related entities. In structures prevalent in jurisdictions such as NOIDA and Greater NOIDA, land is owned by development authorities, while development rights are vested in one group entity, and another group entity may be subject to the insolvency proceedings.

6.1.2. When insolvency proceedings are initiated against the entity holding development rights, development authorities often invoke lease cancellation or other enforcement mechanisms, rendering resolution plans commercially unviable. In several cases, landowners have unilaterally terminated joint development agreements upon commencement of the corporate insolvency resolution process (CIRP) under the Code, leading to prolonged litigation and project stagnation.

6.1.3.

lly terminated joint development agreements upon commencement of the corporate insolvency resolution process (CIRP) under the Code, leading to prolonged litigation and project stagnation.

6.1.3. Projects of the corporate debtor (CD) that are otherwise solvent or nearing completion also become trapped when the CD has multiple projects under a common insolvency process, as moratorium restrictions and lender control are applied across all projects. Since land constitutes the core asset of real estate projects, unresolved land rights, particularly where land is owned by a related entity rather than the CD, severely undermine title transfer and the feasibility of resolution.

6.2. Absence of reliable technical and cost data before the invitation of resolution plans

6.2.1. Resolution professionals (RPs) and resolution applicants (RAs) have consistently highlighted the absence of reliable technical, planning, and cost-related information at the stage when resolution plans are invited. Independent assessments of cost-to-complete, detailed pending work schedules, and construction sequencing data are generally unavailable.

6.2.2. Information Memorandum (IM) frequently omit critical details relating to approvals, pending regulatory challenges and approval validity timelines, preventing prospective RAs from accurately evaluating project viability. Discrepancies across developer records, RERA databases, and escrow accounts further compound information gaps.

ty timelines, preventing prospective RAs from accurately evaluating project viability. Discrepancies across developer records, RERA databases, and escrow accounts further compound information gaps. As a result, only a limited number of developers participate in many processes, as bidders are unable to price risks or commit to binding timelines without credible baseline data.

6.2.3. This information asymmetry leads to reduced competition, sub-optimal resolution outcomes, and unrealistic completion schedules that ultimately disadvantage homebuyers.

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6.3. Frozen escrow accounts and unavailability of funds for construction

6.3.1. Although regulatory frameworks envision project-wise escrow accounts and ring- fenced cash flows, escrow and current accounts are often frozen or rendered inoperative upon commencement of CIRP, even where sufficient funds are available for construction. There is no uniform or enforceable standard operating procedure across States governing the operation of project escrow accounts during insolvency.

6.3.2. Diversion of homebuyer funds across projects remains a persistent concern, with limited mechanisms to recover misapplied and diverted funds. While RERA mandates that project funds be used exclusively for the registered project, enforcement gaps persist in practice. As a result, construction activity is frequently halted despite the availability of funds, directly undermining statutory ring-fencing requirements and leaving homebuyers without access to funds already committed for project completion.

6.4.

y halted despite the availability of funds, directly undermining statutory ring-fencing requirements and leaving homebuyers without access to funds already committed for project completion.

6.4. Absence of standard operating procedures with development authorities

6.4.1. There is no standardised framework governing the conduct of development authorities once a real estate project is admitted into CIRP. Authority responses vary widely, ranging from cooperative restructuring of dues to insistence on immediate payment of principal, penalties, and interest, or initiation of lease cancellation proceedings.

6.4.2. Even after approval of a resolution plan by the NCLT, authorities have, in several cases, refused revalidation of approvals or raised fresh objections outside the CIRP record, forcing stakeholders into further litigation. This unpredictability introduces significant structural risk for the successful Resolution Applicants (SRA), as development rights and title remain unstable even after judicial approval of a resolution plan.

6.5. Expiry of regulatory approvals during CIRP and absence of fast-track revalidation

6.5.1. Regulatory approvals under RERA and local development laws are subject to finite validity periods. Due to prolonged CIRP timelines, such approvals often lapse before a resolution plan is approved. Regulatory authorities have noted that, in many cases, approvals expire solely because of delays inherent in the insolvency process.

6.5.2.

vals often lapse before a resolution plan is approved. Regulatory authorities have noted that, in many cases, approvals expire solely because of delays inherent in the insolvency process.

6.5.2. Revalidation of approvals thereafter depends on administrative discretion and capacity, which may not align with timelines committed under the resolution plan. In the absence of fast- track revalidation mechanisms, otherwise viable projects remain stalled at the resolution plan implementation stage, creating a critical bottleneck in project revival.

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6.6. Unilateral powers exercised by land-owning authorities

6.6.1. Land-owning authorities are not integrated into the commercial decision-making framework of the Committee of Creditors (CoC) but retain significant unilateral powers, including lease termination and escalation of penalties. These powers operate outside the CIRP framework and are frequently exercised post-approval of resolution plans.

6.6.2. In the absence of clear regulated participation, authority involvement remains largely observational during CIRP, while substantive administrative action may later negate approved resolutions, leading to increased litigation and systemic uncertainty.

6.7. Belated claims and post-approval litigation

6.7.1. Real estate insolvency cases involve large and geographically dispersed homebuyer populations, resulting in a substantial volume of belated claims. In several cases, belated claims constitute a significant proportion of the final creditor list.

6.7.2.

ally dispersed homebuyer populations, resulting in a substantial volume of belated claims. In several cases, belated claims constitute a significant proportion of the final creditor list.

6.7.2. Belated claimants frequently resist refund-based treatment due to appreciation in property values, triggering prolonged litigation and delaying implementation of approved plans. Continuous inflow of claims destabilises negotiations, inflates liabilities, and undermines the certainty required for the RAs.

6.7.3. Additionally, aggregation of the FCs’ claims across multiple projects distorts voting shares within the CoC, diluting homebuyer representation and skewing decision-making.

6.8. Passive functioning of authorised representatives

6.8.1. Authorised representatives (ARs) often function as passive intermediaries, limiting their role to the circulation of documents without structured engagement or guidance to homebuyers. Resolution plans are placed for voting without adequate consultation, leaving allottees insufficiently informed about long-term implications.

6.8.2. As a result, plans containing onerous or one-sided clauses are approved without meaningful deliberation. Post-approval, disputes frequently arise when homebuyers become aware of costs or conditions not clearly understood at the voting stage. There are inadequate codified standards governing AR independence, communication duties, or minimum engagement requirements.

6.9. Post-approval execution failures and lack of effective monitoring

6.9.1.

adequate codified standards governing AR independence, communication duties, or minimum engagement requirements.

6.9. Post-approval execution failures and lack of effective monitoring

6.9.1. Significant gaps persist between a resolution plan approval and on-ground execution. In several cases, construction remains stalled for years after approval, while successful resolution applicants (SRAs) may impose administrative charges not transparently disclosed in the plan.

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6.9.2. Monitoring committees often become ineffective or cease functioning once management control shifts. Homebuyers face substantial difficulty in securing timely judicial intervention for post-approval grievances. There is a need for a more robust mechanism to oversee RA conduct after plan approval or to address non-performance.

6.10. Prolonged NCLT approval timelines and lack of specialised benches

6.10.1. Delays between the CoC approval of a resolution plan and its approval by the NCLT materially impair project viability. Frequent transfers between benches, repeated adjournments and hearings, and procedural inefficiencies prolong uncertainty. During this period, CIRP costs continue to accrue, eroding funds available for construction.

6.10.2. The absence of specialised benches with sector-specific expertise further compounds the problem, as adjudication may not adequately account for the technical and financial realities of a real estate project completion.

6.11.

ches with sector-specific expertise further compounds the problem, as adjudication may not adequately account for the technical and financial realities of a real estate project completion.

6.11. Low participation by resolution applicants

Participation by credible prospective RAs remains limited, with most processes attracting only a small number of bidders. Incomplete information, uncertainty regarding authority conduct, unclear treatment of legacy dues, and limited unsold inventory inhibits reliable financial modelling. Limited competition reduces bargaining power for creditors and homebuyers, resulting in acceptance of sub-optimal plans due to the absence of viable alternatives.

6.12. Reverse CIRP

Reverse CIRP has evolved through judicial practice but lacks statutory recognition under the IBC. Its application raises concerns regarding inconsistency with Section 29A, as defaulting promoters are permitted to retain operational control.

6.13. Uncertainty regarding immunity from past tax and regulatory liabilities

The scope of immunity from pre-CIRP tax and regulatory liabilities remains unclear despite approval of resolution plans and the clean slate principle provided under the Code. Authorities have, in several cases, reopened historical demands post-approval, exposing resolution applicants to unforeseen liabilities. This uncertainty increases funding costs, discourages bidder participation, and necessitates further litigation to establish principles that are expected to flow automatically from plan approval.

6.14.

certainty increases funding costs, discourages bidder participation, and necessitates further litigation to establish principles that are expected to flow automatically from plan approval.

6.14. Challenges in post-resolution monitoring by RERA

While RERA is designed for project-level oversight and IBC focuses on time-bound restructuring, the transition between the two frameworks remains unstructured. Post-approval

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monitoring mechanisms are weak, leaving a regulatory vacuum during the implementation phase of a resolution plan. The RERAs are not systematically mandated to monitor resolution plan execution, despite their institutional capacity and access to project-level data. This gap leaves homebuyers without effective recourse during the critical post-resolution period.

6.15. Absence of a unified group insolvency framework for SPV-based structures

Real estate groups typically operate through multiple SPVs, resulting in fragmented insolvency outcomes across projects. Assets and financing are often held at the group level, while liabilities are ring-fenced at the SPV level, obstructing coherent resolution. Viable projects are frequently dragged into insolvency due to group-level defaults, while cross-subsidisation of cash flows distorts project-specific outcomes. Absence of a group insolvency framework prevents isolation of solvent projects and undermines efficient resolution across interconnected real estate portfolios.

Key recommendations of the Committee

a group insolvency framework prevents isolation of solvent projects and undermines efficient resolution across interconnected real estate portfolios.

Key recommendations of the Committee

The Committee’s analysis of the identified 55 critical issues and related remedial recommendations proceed from the premise that value in real estate is realised through completion or resolution, not liquidation. Insolvency law, therefore, must operate as a facilitative framework for project revival rather than a blunt instrument of debt enforcement. The recommended framework, therefore, balances economic substance with legal form. While the Committee has given 155 specific Recommendations, some of the key recommendations are set out, as follows.

7.1. Project-wise insolvency admission: The Committee recommends that CIRP in the real estate sector should ordinarily be admitted on a project-wise basis, with each real estate project treated as an independent unit for the purposes of insolvency admission and resolution. 7.1.1. Admission of CIRP may be confined to the defaulting project, and solvent, completed or unrelated projects of the same developer may not be included. 7.1.2. Given the peculiar challenges in the insolvency resolution of real estate cases, as highlighted by this Committee, the MCA and IBBI may consider enabling project-wise admission of CIRP of real estate cases.

peculiar challenges in the insolvency resolution of real estate cases, as highlighted by this Committee, the MCA and IBBI may consider enabling project-wise admission of CIRP of real estate cases. The Department of Financial Services (DFS) and RERA may consider facilitating project-wise admission by laying down project-wise frameworks such as project-wise lending, maintenance of CDs’ accounts project-wise, and project-wise monitoring.
7.1.3. Entity-level (the Corporate Debtor) CIRP encompassing multiple projects may be permitted only in exceptional circumstances, including: a. substantial inter-linkages or commingling of funds across projects;

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b. cross-collateralisation of assets or guarantees; or c. demonstrable fraud or mismanagement affecting multiple projects. 7.1.4. Where entity-level admission is ordered, the AA may record specific reasons in writing justifying deviation from the project-wise admission approach. 7.2. Procedural consolidation of land and development rights: Where the land and development rights are split across different group entities: 7.2.1. The AA may exercise powers to order procedural consolidation of the assets required for the project’s completion, treating the land-holding entity and the development entity as a single economic unit for the limited purpose of a resolution plan. 7.2.2.

tion of the assets required for the project’s completion, treating the land-holding entity and the development entity as a single economic unit for the limited purpose of a resolution plan. 7.2.2. Standard Operating Procedures (SOPs) may be issued to guide landowners and development authorities to resist unilaterally terminating JDAs or leases solely on the ground of CIRP initiation, provided that the current dues of these authorities are addressed in the resolution plan. 7.3. Mandatory independent technical and cost assessment: The Committee recommends that immediately upon admission, the IRP/ RP should appoint a reputable, independent technical agency (e.g., engineers, quantity surveyors). This agency should conduct a comprehensive audit to determine the physical progress of construction (tower-wise/unit- wise), detailed Cost-to-Complete estimates based on current market rates, status of all statutory approvals (fire, environment, height clearance) and their remaining validity and inventory of materials on site. This Technical Assessment Report must be an integral part of the IM provided to prospective resolution applicants (PRAs).

7.4. Mandatory operation of project-wise Escrow Accounts: The IBBI may specify that escrow accounts linked to the real estate projects under CIRP should not be frozen by RERA just because the CD has been admitted under CIRP. They must remain operational to receive homebuyer receivables and funds for construction. 7.4.1. The RP must operate these accounts in strict compliance with the Section 4(2)(l)(D) of the RERA.

P. They must remain operational to receive homebuyer receivables and funds for construction. 7.4.1. The RP must operate these accounts in strict compliance with the Section 4(2)(l)(D) of the RERA. Withdrawals must be permitted only for construction and land costs of that specific project, certified by a Chartered Accountant and an Engineer. 7.4.2. In a multi-project CD, the RP must open and maintain separate bank accounts for each project. Cross-utilisation of funds between projects during the CIRP should be strictly prohibited, unless explicitly approved by the CoC of the contributing project.

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7.5. Formulation of SOPs: The Committee recommends that the Ministry of Housing and Urban Affairs (MoHUA), in coordination with State Governments, may notify unified SOPs for Development Authorities dealing with IBC cases:

7.5.1. Dues restructuring: The SOP may prescribe a standard formula for recalculating land dues in insolvency (e.g., waiving penal interest and time extension charges), accepting the principal amount and simple interest as a sustainable resolution payment.

7.5.2. Moratorium compliance: Appropriate advisories that lease cancellation proceedings cannot be initiated or continued during the moratorium period.

7.5.3. Binding nature: A clarification that once a Resolution Plan is approved by the AA, it is binding on the Development Authority as a statutory creditor. The Development Authority may process approvals (OC/CC/Sub-lease deeds) based on the terms of the approved plan without raising legacy demands.

7.6.

evelopment Authority as a statutory creditor. The Development Authority may process approvals (OC/CC/Sub-lease deeds) based on the terms of the approved plan without raising legacy demands.

7.6. Automatic extension and fast-track revalidation

7.6.1. The Committee recommends that MoHUA may amend the legislative framework of RERAs to exclude the duration of the CIRP from the calculation of the validity period of licenses and approvals. Upon approval of a resolution plan, all necessary approvals should be deemed valid or eligible for automatic revalidation for the duration of the construction timeline specified in the plan.

7.6.2. A dedicated "Insolvency Clearance Window" should be established within local bodies to process technical revalidations (structural safety checks, fire norms) within a stipulated timeline (e.g., 30 days) to allow immediate resumption of work.

7.7. Regulatory participation in the CoC and Monitoring Committee:

7.7.1. Land Authorities should be accorded the status of special invitees to the CoC meetings where land-related issues are discussed. Similarly, they must be included as members of the monitoring committee for implementation of the resolution plan.

7.7.2. Land development authorities are accorded the treatment of secured operational creditors under Section 53 of the Code (as decided by the Hon’ble Supreme Court), thereby entitling them to a higher priority in the distribution of the proceeds ranking above other stakeholders such as unsecured FCs and the Central/ State Government.

the Hon’ble Supreme Court), thereby entitling them to a higher priority in the distribution of the proceeds ranking above other stakeholders such as unsecured FCs and the Central/ State Government. These authorities are, by and large, treated on the same footing as secured FCs i.e. Banks, financial institutions, etc. Therefore, ideally, land authorities should not attempt to seek recovery of their dues in full, including through litigation that would override or alter the statutory scheme of distribution provided under the Code and would be contrary to the binding and final nature of an approved resolution plan.

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7.7.3. The IBBI should reiterate to the land development authorities that the termination of land leases/ development agreements by public authorities is prohibited during the CIRP, provided the RP is compliant with current compliance norms (safety, security). The resolution plan must mandatorily propose a settlement for land dues. If the CoC approves a plan with a haircut on land dues, and the NCLT confirms it, the concerned Authority must be legally barred from terminating the lease based on these settled past dues.

7.8. List of homebuyers based on available records: The names of all homebuyers should be automatically included in the list of creditors and disclosed in the IM based on the CD’s books of accounts, RERA records or IU (NeSL) records where available. The RP should actively verify and populate the list of creditors from these records.

and disclosed in the IM based on the CD’s books of accounts, RERA records or IU (NeSL) records where available. The RP should actively verify and populate the list of creditors from these records. In case of information gaps in CD’s records, the RP should also access RERA records. Furthermore, RERAs may strengthen the existing monitoring mechanisms to ensure that developers are filing and updating the details of allottees for all projects, including those entering insolvency.

7.9. Strengthening Authorised Representative (AR) accountability and engagement

7.9.1. To enable creditors in a class to make an informed choice at the public announcement stage, the IRP/ RP should provide access to a brief profile of the proposed AR, along with a brief note on the role and duties of an AR.

7.9.2. Regulations must mandate that ARs hold structured consultations (town hall, webinars) with homebuyers before every critical vote, specifically to explain the Resolution Plan's terms, risks, financial and other implications. The AR must circulate summaries of complex legal documents, highlighting key deviations from the original Builder-Buyer Agreement, if any.

7.9.3. The AR may be mandated to submit the record of discussions of meetings held with creditors in the class, to the RP for inclusion in the minutes of the CoC meeting.

7.10. Robust monitoring and RERA integration

7.10.1.

submit the record of discussions of meetings held with creditors in the class, to the RP for inclusion in the minutes of the CoC meeting.

7.10. Robust monitoring and RERA integration

7.10.1. The resolution plan must mandatorily constitute a Project Monitoring Committee (PMC) comprising representatives of homebuyers, lenders, land authorities, concerned RERA, sector specialists and the SRA.

7.10.2. Upon plan approval, the project's new timeline and specifications must be registered with RERA.

7.10.3. The terms of "plan implementation" must be defined not just by financial settlement but by physical construction milestones.

7.11. Specialised NCLT benches: The NCLT may establish Specialised Real Estate Benches in key jurisdictions (Delhi, Mumbai), staffed by Members with expertise in infrastructure and project finance.

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7.12. Improving market participation: The IM must be a ‘Red Herring Prospectus’ quality document with enhanced disclosures, such as details of completion status of units, sale status, possession or refund status of units in the project. Further, the regulations should actively encourage homebuyer-led resolution plans. Eligibility criteria should be relaxed for Associations of Allottees bidding for their own projects. Public Sector Undertakings (NBCC, HUDCO) should be encouraged to act as "Project Management Consultants" or RAs to provide an experienced hand for implementing the real estate resolution plan.

cts. Public Sector Undertakings (NBCC, HUDCO) should be encouraged to act as "Project Management Consultants" or RAs to provide an experienced hand for implementing the real estate resolution plan. The SWAMIH Fund and other last-mile financing windows should be integrated into the resolution process to support credible bidders.

7.13. Phasing-out Reverse CIRP in Favour of Code-compliant models: The Committee does not recommend "Reverse CIRP" at all, though the same has been practiced in a few cases, under judicial orders. Instead, the Code may allow for project-wise admission of CIRP or as per the framework recommended by this Committee, focus should be on project-wise resolution, where the management is transferred to a professional RP and then to an appropriate RA, ensuring Section 29A compliance.

7.14. Strict enforcement of "clean slate" principle: The regulations should explicitly state that the "clean slate" protection extends to all real estate-specific liabilities, including property taxes, external development charges (EDC), and regulatory penalties accrued prior to the plan approval. There should be a waiver of all penal interest and fines upon approval of the resolution plan. Municipalities and Development Authorities may refrain from withholding future approvals (OC/CC) on the grounds of pre-CIRP arrears that were settled under an approved resolution plan.

7.15.

an. Municipalities and Development Authorities may refrain from withholding future approvals (OC/CC) on the grounds of pre-CIRP arrears that were settled under an approved resolution plan.

7.15. Enhancing data integrity via Information Utility: Information Utility (IU) should be mandated to store real estate project data, including homebuyer allotments and payment history, in coordination with RERAs and banks, respectively. This data should be an important source for claim verification by the RP. Furthermore, the IU should facilitate the electronic filing of claim forms by homebuyers through its portal. The IU should also share information regarding default by a real estate project and its subsequent admission into CIRP, if that happens, with the concerned homebuyers.

7.16. Institutionalising the RERA handover

7.16.1. The regulations should formalise a mechanism where, upon plan approval, the project's monitoring transits the concerned RERA. The resolution plan’s timelines and deliverables should be registered with RERA.

7.16.2. RERA may enforce its penal powers to ensure that the timelines committed in the resolution plan are adhered to by the SRA, thereby ensuring that the SRA remains accountable to the homebuyers.

6.2. RERA may enforce its penal powers to ensure that the timelines committed in the resolution plan are adhered to by the SRA, thereby ensuring that the SRA remains accountable to the homebuyers.

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7.17. Procedural consolidation: The AA should exercise its inherent powers to order procedural consolidation of the CIRPs for interdependent SPVs within the same real estate group. This allows for a common CoC meeting schedule and coordinated decision-making without merging assets.

7.18. Conclusion

The Committee’s central conclusion is that real estate insolvency requires a decisive shift from an entity-centric, recovery-oriented paradigm to a project-centric, completion-driven framework. The recommendations seek to harmonise insolvency law with real estate regulation, judicial guidance, and constitutional values, ensuring that the Code functions as an instrument of resolution rather than prolonged uncertainty. The ultimate measure of success, as the Committee emphasises, lies not in procedural metrics but in the delivery of homes, restoration of trust, and revival of stalled economic value.

uncertainty. The ultimate measure of success, as the Committee emphasises, lies not in procedural metrics but in the delivery of homes, restoration of trust, and revival of stalled economic value.

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CHAPTER I: INTRODUCTION Background 1.1. The real estate sector occupies a distinctive and sensitive status within the insolvency framework under the Code. Unlike most corporate insolvencies, distress in real estate projects directly affects a large number of retail allottees whose life savings are invested in residential housing projects and whose primary interest lies in completion and possession of homes rather than financial recovery. Consequently, real estate insolvencies raise complex questions at the intersection of insolvency law, consumer protection, housing regulation, and constitutional values.

1.2. Over the years, real estate has emerged as one of the largest contributors to insolvency proceedings in terms of the number of cases as well as stakeholder impact. Insolvency proceedings in this sector frequently involve thousands of homebuyers, multiple regulatory authorities, project-specific financing arrangements, and ongoing construction obligations. These characteristics have exposed structural limitations in the application of a corporate- debtor-centric insolvency framework to project-based real estate development.

1.3. The need for a calibrated and sector-sensitive approach has been repeatedly acknowledged by courts, regulators, and stakeholders.

olvency framework to project-based real estate development.

1.3. The need for a calibrated and sector-sensitive approach has been repeatedly acknowledged by courts, regulators, and stakeholders. In particular, concerns have arisen regarding project-wise resolution, treatment of homebuyers as Financial Creditors (FCs), coordination with RERAs, and balancing resolution objectives with consumer protection.

1.4. This Chapter sets out the context, rationale, and mandate for the Committee’s work. The subsequent chapters of the Report examine specific issues, stakeholder submissions, and the Committee’s analysis and recommendations in detail. Directions of the Supreme Court 1.5. The constitution of this Committee finds its immediate genesis in the directions issued by the Hon’ble Supreme Court in the matter of Mansi Brar Fernandes v. Shubha Sharma & Anr. (Civil Appeal No. 3826 of 2020 and connected matters; Refer para 21.2(5), page 45 of the Order), decided on 12 September 2025. In that judgment, the Hon’ble Supreme Court undertook an extensive examination of the functioning of the insolvency framework in real estate cases and underscored the need for systemic reforms to protect the interests of genuine homebuyers while preventing misuse of the Code.

1.6. The Court, while clarifying the distinction between genuine allottees and speculative investors, issued a series of policy-oriented directions calling for coordinated regulatory action, sector-specific guidelines, and institutional capacity building.

enuine allottees and speculative investors, issued a series of policy-oriented directions calling for coordinated regulatory action, sector-specific guidelines, and institutional capacity building. Of particular relevance, the Court directed that a council comprising representatives from relevant ministries, regulators, domain experts, and industry stakeholders be constituted to suggest commercially viable systemic reforms for real estate insolvency. Pursuant to these directions, the present Committee

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was constituted by IBBI to examine the real estate insolvency framework holistically and to recommend measures aimed at improving resolution outcomes, safeguarding homebuyer interests, and ensuring coherence between the Code and sectoral regulatory regimes. Summary of the Mansi Brar Fernandes Judgment 1.7. In Mansi Brar Fernandes v. Shubha Sharma & Ors., the Hon’ble Supreme Court examined whether certain allottees who had entered into buy-back or assured-return arrangements could be treated as “genuine homebuyers” entitled to invoke insolvency resolution through Section 7 of the Code, or whether they were speculative investors misusing the insolvency process as a recovery mechanism.

1.8. The Hon’ble Supreme Court emphasised that the Code is a collective resolution framework and not a tool for individual debt recovery.

isusing the insolvency process as a recovery mechanism.

1.8. The Hon’ble Supreme Court emphasised that the Code is a collective resolution framework and not a tool for individual debt recovery. It held that the determination of whether an allottee is a genuine homebuyer or a speculative investor is fact-specific and must be guided primarily by the intention of the allottee, particularly whether there was a real intent to take possession of a residential unit. Indicative factors identified by the Hon’ble Supreme Court included the presence of buy-back or assured-return clauses, substitution of possession with refund rights, deviation from the RERA Model Agreement, purchase of multiple units, and insistence on high or unrealistic returns.

1.9. Applying these principles, the Hon’ble Supreme Court held that the appellants before it were speculative investors and therefore not entitled to initiate corporate insolvency resolution proceedings under Section 7 of the Code. At the same time, the Court clarified that such investors are not barred from pursuing other remedies under law, including filing claims in an ongoing CIRP, approaching RERA, consumer fora, or civil courts.

1.10. Importantly, the Hon’ble Supreme Court reaffirmed that the right to shelter forms part of the right to life under Article 21 of the Constitution and stressed that housing should not be reduced to a purely speculative commodity.

me Court reaffirmed that the right to shelter forms part of the right to life under Article 21 of the Constitution and stressed that housing should not be reduced to a purely speculative commodity. It observed that RERA is the primary forum for addressing homebuyer grievances and that the insolvency framework should ordinarily function as a measure of last resort for resolving distressed projects.

1.11. The judgment also issued wide-ranging systemic directions, including calls for project- wise resolution in real estate insolvency, strengthening of RERA institutions, meaningful representation of allottees in the Committee of Creditors, creation or expansion of revival funds for stalled projects, and formulation of sector-specific insolvency guidelines by the Insolvency and Bankruptcy Board of India (IBBI) in consultation with RERA authorities. An extract of the judgment containing directions and suggestions of the court is placed at ANNEXURE A of this Report.

y and Bankruptcy Board of India (IBBI) in consultation with RERA authorities. An extract of the judgment containing directions and suggestions of the court is placed at ANNEXURE A of this Report.

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Composition of the Committee 1.12. The Committee was constituted by the IBBI pursuant to the directions of the Hon’ble Supreme Court in the aforementioned matter. The Committee was constituted under the Chairmanship of Mr. Jayanti Prasad, Whole Time Member, IBBI. The Committee comprised representatives from key ministries and institutions with a bearing on real estate insolvency, including the Ministry of Corporate Affairs, the Ministry of Housing and Urban Affairs, IBBI, and Real Estate Regulatory Authorities and land development authorities. The details of the Members of the Committee are placed at ANNEXURE B of this Report. This multi- disciplinary composition was intended to ensure that the Committee’s deliberations reflect legal, regulatory, financial, and operational perspectives.
Scope of Committee’s work
1.13.

This multi- disciplinary composition was intended to ensure that the Committee’s deliberations reflect legal, regulatory, financial, and operational perspectives.
Scope of Committee’s work
1.13. The Committee was mandated to examine the functioning of the insolvency framework in relation to real estate projects and to recommend measures that would: • Enhance the effectiveness and timeliness of the resolution of stressed real estate projects; • Protect the interests of homebuyers; • Promote project-wise admission and completion-oriented resolution strategies; • Improve coordination between insolvency institutions and sectoral regulators, particularly RERAs and local development authorities; and • Suggest systemic and commercially viable reforms consistent with the objectives of the Code. 1.14. The analysis and recommendations set out in this Report are directed largely towards the residential real estate segment, which accounts for a substantial proportion of insolvency proceedings under the Code and carries pronounced public interest implications. Distress in residential projects directly impacts numerous individual allottees, often involving their life savings and primary housing needs. While aspects of the discussion may have relevance for commercial or mixed-use developments, the focus remains on the legal, financial and operational issues characteristic of residential project insolvencies, especially in cases of prolonged delay or stalled construction.

1.15.

pments, the focus remains on the legal, financial and operational issues characteristic of residential project insolvencies, especially in cases of prolonged delay or stalled construction.

1.15. In discharging its mandate, the Committee adopted a consultative and evidence-based approach. The Committee held multiple meetings over the course of its tenure and engaged extensively with a wide range of stakeholders. These included insolvency professionals, financial institutions, developers, homebuyer representatives, legal experts, and other domain specialists. Stakeholder inputs were received through presentations, written submissions, and

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structured deliberations during the meetings. The Committee examined judicial pronouncements, existing statutory and regulatory provisions, market practices, and empirical experiences from ongoing and concluded real estate insolvency cases. The recommendations in this Report are informed by these deliberations and seek to balance legal coherence, commercial feasibility, and the protection of homebuyer interests, consistent with the objectives of the Code.

this Report are informed by these deliberations and seek to balance legal coherence, commercial feasibility, and the protection of homebuyer interests, consistent with the objectives of the Code.

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CHAPTER II: REAL ESTATE INSOLVENCY: OVERVIEW AND ISSUES Sector profile 2.1. The real estate sector constitutes one of the most significant pillars of India’s economic framework, with extensive linkages to employment, credit markets, infrastructure development and household asset creation. Prior to the enactment of the IBC, financial distress in the real estate sector was addressed through a fragmented landscape of consumer fora, civil courts, regulatory authorities and revenue recovery mechanisms. This multiplicity of fora resulted in prolonged timelines, inconsistent outcomes and severe erosion of value, with homebuyers frequently bearing the brunt of stalled or abandoned projects.

2.2. The IBC marked a fundamental shift by introducing a unified, time-bound framework for the resolution of corporate distress through the CIRP. By consolidating insolvency proceedings within a single statutory process, the Code sought to maximise value, ensure predictability and promote resolution over liquidation. However, the application of the IBC to real estate required significant adaptation, given the sector’s unique structure and stakeholder composition.

2.3. Real estate developers typically operate multiple projects simultaneously, often at different stages of completion and with project-specific financing, approvals and cash flows.

omposition.

2.3. Real estate developers typically operate multiple projects simultaneously, often at different stages of completion and with project-specific financing, approvals and cash flows. Financial distress may arise in one or more projects, yet initiation of CIRP against the developer as a corporate entity can have spill-over effects across otherwise viable or completed projects. This structural feature of the sector has posed complex challenges for insolvency resolution, particularly in balancing project-wise realities with the entity-centric architecture of the Code.

2.4. A defining development in real estate insolvency under the IBC was the recognition of homebuyers as the Financial Creditors (FCs) through an amendment to the Code in the year 2018. This amendment acknowledged the commercial reality that advances received from allottees function as project finance and that homebuyers bear both completion and timing risks. Granting homebuyers the status of FCs enabled their participation in the CoC with voting rights and conferred them with the power to initiate insolvency proceedings, thereby significantly recalibrating stakeholder dynamics in real estate CIRPs. To balance effective access to insolvency remedies with protection against frivolous or minority-driven proceedings, the Code was further amended in the year 2020 to introduce a threshold for homebuyer-initiated applications.

to insolvency remedies with protection against frivolous or minority-driven proceedings, the Code was further amended in the year 2020 to introduce a threshold for homebuyer-initiated applications. Under this framework, CIRP may be initiated only where at least one hundred allottees or ten per cent of the total allottees in a project, whichever is lower, jointly file the application. This calibrated threshold mechanism sought to ensure that insolvency proceedings reflect collective distress while remaining proportionate to project size.

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Volume and distribution of real estate insolvency cases
2.5. A cumulative total of 553 real estate CIRPs have been admitted under the IBC framework as of 30 September 2025. The distribution of these 553 admitted real estate cases across various outcomes under the Code is as follows:

2.5.1. Cases resolved successfully: 95 of the 553 admitted real estate cases have concluded through successful resolution, directly affecting approximately 1,40,200 homebuyers whose interests have been restored through either project completion, asset recovery, or alternative stakeholder relief mechanisms. These successfully resolved cases represent instances where the CIRP framework has accomplished the fundamental objective of the insolvency framework: restoration of creditor value and stakeholder relief.

uccessfully resolved cases represent instances where the CIRP framework has accomplished the fundamental objective of the insolvency framework: restoration of creditor value and stakeholder relief. The successful resolution cases include both situations where projects have been completed and units delivered to homebuyers, as well as situations where financial recovery mechanisms have been implemented and partial or full homebuyer capital has been recovered.

2.5.2. The resolution of Jaypee Infratech Limited represents the largest and most prominent real estate insolvency case resolved to date under the Code, serving as a benchmark case demonstrating the IBC framework's capacity to deliver comprehensive stakeholder relief in complex, large-scale real estate insolvencies involving vast homebuyer populations and enormous financial claims.

2.5.3. The Jaypee Infratech insolvency involved approximately 21,000 homebuyers, each of whom had invested in residential units under Jaypee Infratech projects with expectations of project completion and unit delivery within contractually specified timelines. The aggregate monetary claims of these 21,000 homebuyers, admitted as financial claims within the insolvency proceeding, aggregated to Rs.12,800 crore, representing an extraordinary concentration of homebuyer capital invested in a single developer entity.

2.5.4. The resolution plan for Jaypee Infratech received formal approval from the NCLT on 7 March 2023.

an extraordinary concentration of homebuyer capital invested in a single developer entity.

2.5.4. The resolution plan for Jaypee Infratech received formal approval from the NCLT on 7 March 2023. The resolution outcome accomplished a critical objective: all 21,000 homebuyers were to secure possession and delivery of their residential units, under the resolution plan.

2.5.5. The Jaypee Infratech resolution demonstrates the IBC framework's capacity to achieve comprehensive homebuyer relief even in circumstances involving extraordinary financial claims (Rs.12,800 crore), vast homebuyer populations (21,000 individuals), and complex multi-project structures. The successful resolution of this landmark case provides empirical validation that the IBC framework, properly applied with adequate resolution plan structuring and coordinated stakeholder engagement, can accomplish the fundamental insolvency resolution objective: delivery of value to creditors and restoration of stakeholder interests.

2.5.6. Cases liquidated: 43 of the 553 admitted real estate cases have proceeded to formal liquidation proceedings, resulting in the winding up of developer entities and distribution of remaining assets to creditors in accordance with statutory priority classifications. Liquidation

rmal liquidation proceedings, resulting in the winding up of developer entities and distribution of remaining assets to creditors in accordance with statutory priority classifications. Liquidation

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proceedings represent the endpoint of failed resolution attempts, indicating that no viable resolution plan was received or no resolution received adequate creditor support and that orderly asset liquidation is the remaining mechanism for creditor recovery. In the real estate sector, the liquidated assets typically include land parcels, partially completed projects, and equipment and materials remaining at project sites.

2.5.7. Cases withdrawn or closed: 194 of the 553 admitted real estate cases have been withdrawn from the CIRP process or otherwise closed through settlement/ appeal/ review. These withdrawn and closed cases potentially reflect situations where cases were settled through negotiated agreements or resolved through alternative mechanisms, outside the formal insolvency framework.

2.5.8. Ongoing cases: 221 of the 553 admitted real estate cases remain in active CIRP proceedings at various procedural stages, representing cases where the formal insolvency process is continuing. These ongoing cases involve approximately 1,08,887 homebuyers, indicating that nearly half of the total homebuyer population within the IBC real estate insolvency system continues to await resolution outcomes with uncertain timelines and uncertain resolution prospects.

g that nearly half of the total homebuyer population within the IBC real estate insolvency system continues to await resolution outcomes with uncertain timelines and uncertain resolution prospects. The prolonged duration of ongoing cases, many of which have been pending CIRP resolution for multiple years since admission, reflects the complexity of real estate insolvency proceedings and the procedural delays inherent in the adjudicatory system.

2.6. The cumulative impact of the 553 admitted real estate cases extends across a homebuyer population of approximately 2,49,087 individuals, collectively representing substantial financial investments and housing aspirations. This total comprises approximately 1,40,200 homebuyers in the 95 resolved cases and approximately 1,08,887 homebuyers in the 221 ongoing cases. The involvement of such a substantial homebuyer population in real estate insolvency proceedings reflects the systemic nature of the real estate sector financial distress and the pervasive impact of developer financial failures on India's housing aspirants. Each homebuyer represents an individual household whose housing security, capital accumulation, and financial stability have been compromised by a developer's insolvency. The aggregated impact across homebuyers represents social and economic disruption affecting thousands of households and millions of family members. Legal framework and jurisprudence Framework under IBC and Regulatory interventions 2.7.

represents social and economic disruption affecting thousands of households and millions of family members. Legal framework and jurisprudence Framework under IBC and Regulatory interventions 2.7. The legislative and regulatory framework has progressively strengthened the position of homebuyers in insolvency resolution of real estate projects, with each amendment targeting a specific gap in claim filing, communication, participation, and protection of possession rights. These amendments are summarised in the following paragraphs:

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6 August 2018 – Recognition as Financial Creditors

2.7.1. The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, notified on 6 August 2018, brought homebuyers (allottees under real estate projects) within the definition of "financial creditor" by expanding the scope of "financial debt" under Section 5(8)(f) to expressly include amounts advanced for purchase of units where such amounts have the commercial effect of borrowing. This legislative intervention, prompted by the Hon’ble Supreme Court pronouncement in Pioneer Urban Land and Infrastructure Ltd. v. Union of India, elevated homebuyers from an ambiguous status to a class of FCs entitled to initiate CIRP under Section 7 of the Code, vote through an AR in the CoC, and participate meaningfully in resolution decisions, thereby addressing their vulnerability as dispersed retail investors funding project construction through advances.

3 July 2018 – Online Form CA

2.7.2.

e meaningfully in resolution decisions, thereby addressing their vulnerability as dispersed retail investors funding project construction through advances.

3 July 2018 – Online Form CA

2.7.2. With effect from 3 July 2018, homebuyers were provided a dedicated, simplified claim form (Form CA) and an online mechanism to submit their claims in the CIRP of real estate entities. This measure recognised homebuyers as a distinct class within FCs and addressed practical difficulties faced by scattered retail allottees in physically filing claims, thereby promoting accessibility and standardisation of information submitted to the IRP/ RP.

16 September 2022 – Communication of insolvency to homebuyers

2.7.3. On 16 September 2022, IBBI amended the regulations to mandate that the interim resolution professional issue a communication, along with a copy of the public announcement, to all creditors, including homebuyers, based on the last available books of account of the CD. This ensured that homebuyers, who may not regularly track regulatory publications, receive direct and timely intimation of the commencement of CIRP, enabling them to file their claims within prescribed timelines and participate effectively in the process.

20 July 2023 – Waiver of regulatory fee for allottee plans

2.7.4. With effect from 20 July 2023, a specific relaxation was introduced whereby the regulatory fee under the CIRP regulations is not payable where the approved resolution plan for a real estate project is submitted by an association or group of allottees of that project.

ereby the regulatory fee under the CIRP regulations is not payable where the approved resolution plan for a real estate project is submitted by an association or group of allottees of that project. This change reduced the cost burden on homebuyer associations seeking to act as RAs, thereby encouraging collective bidder participation by allottees and aligning the resolution outcome more closely with the interests of end-user homebuyers.

15 February 2024 – Separate Accounts and Project-wise Plans

2.7.5. Amendments notified by IBBI on 15 February 2024 introduced two important safeguards for real estate CIRPs. First, the IRP/ RP is now required to operate a separate bank account for each real estate project of the CD, ensuring project-wise ring-fencing of cash flows

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and better tracking of funds related to particular allottees. Second, recognising that each project may warrant a different strategy, the CoC has been expressly empowered to direct the RP to invite separate resolution plans for individual projects, enabling tailored resolutions that can maximise value and address project-specific issues rather than forcing a one-size-fits-all solution.

24 September 2024 – Interim Authorised Representative

2.7.6. On 24 September 2024, a framework for the appointment of an interim AR for creditors in a class, including homebuyers, was introduced by IBBI to bridge the gap between filing of the IRP’s application and final approval of the AR by the Adjudicating Authority (NCLT).

R for creditors in a class, including homebuyers, was introduced by IBBI to bridge the gap between filing of the IRP’s application and final approval of the AR by the Adjudicating Authority (NCLT). The interim AR has been accorded the same duties and rights as an AR in CoC meetings during this interregnum, ensuring that the views and voting interests of the class of homebuyers are represented from the very first meetings and that there is no vacuum in their representation at critical decision-making stages.

3 February 2025 – Possession, Facilitators, Authorities and Relaxations

2.7.7. The 3 February 2025 amendments in the relevant regulations by the IBBI brought a suite of real estate-specific measures aimed at improving outcomes for homebuyers in CIRP. First, the RP, with CoC approval and upon fulfilment of contractual and statutory obligations by the concerned homebuyer, can hand over possession of plots, apartments or buildings during the pendency of the resolution process, allowing timely occupation and registration of units instead of forcing allottees to wait until plan approval or process completion.

2.7.8. Second, in large cases with extensive homebuyer participation, the CoC may now direct appointment of “facilitators” for identified sub-classes within a large class of creditors (such as homebuyers), whose role is to act as a link between the AR and the sub-class, facilitate communication, explain the process, and ensure that granular concerns of different segments of allottees are heard and channelled into the CoC deliberations.

en the AR and the sub-class, facilitate communication, explain the process, and ensure that granular concerns of different segments of allottees are heard and channelled into the CoC deliberations.

2.7.9. Third, the regulations permit the CoC to invite competent land and development authorities (for example, NOIDA, HSVP and similar authorities) to attend its meetings so that their inputs on title, land use, approvals and development conditions can be considered, thereby improving the feasibility of resolution plans and building confidence among stakeholders in their implementation.

2.7.10. Fourth, the RPs are now obliged to prepare, within a fixed period, a detailed report on the status of development rights, approvals and permissions for each real estate project, providing the CoC with a clear picture of the regulatory and development landscape while evaluating resolution options.

2.7.11. Fifth, the CoC has been specifically empowered to relax certain conditions for associations or groups of homebuyers when they act as RAs, including in relation to eligibility

n options.

2.7.11. Fifth, the CoC has been specifically empowered to relax certain conditions for associations or groups of homebuyers when they act as RAs, including in relation to eligibility

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norms, performance security and deposits, thereby lowering entry barriers and enabling genuine allottee-driven rescue proposals to compete on a more level playing field with traditional corporate applicants.

12 February 2024 – Exclusion of homes from liquidation estate

2.7.12. In the context of liquidation, a significant protection for homebuyers was introduced on 12 February 2024 by providing that where the CD has already handed over possession of a unit to an allottee in a real estate project, such unit will not form part of the liquidation estate. This ensures that homes in respect of which possession is granted are ring-fenced from distribution among other creditors, safeguarding the property and occupancy interests of allottees who have effectively stepped into the shoes of owners, and reinforcing certainty for those who have already taken possession before commencement or conduct of liquidation. Jurisprudence on real estate issues
2.8. The jurisprudence governing real estate insolvency in India has evolved over time addressing key issues.

n before commencement or conduct of liquidation. Jurisprudence on real estate issues
2.8. The jurisprudence governing real estate insolvency in India has evolved over time addressing key issues. Beginning with the recognition of homebuyers as the FCs, the courts have since developed nuanced principles on issues such as project-wise resolution, filtering of speculative insolvency triggers, treatment of completed projects, and the contours of judicially evolved mechanisms such as reverse CIRP. Jurisprudence has also developed on the intersection of the Code and the RERA Act, each case addressing distinct but interrelated dimensions of sectoral distress. While RERA is structured around project-level regulation, consumer protection and promoter accountability, the IBC provides a framework for the resolution of financial distress at the level of the CD through a creditor-driven, value- maximising process. Judicial interpretation has progressively clarified the manner in which these two regimes coexist and operate in tandem. Collectively, these decisions reflect a calibrated effort by the courts to balance homebuyer interests, creditor equality, and the fundamental objectives of the insolvency framework. Some important case laws relating to real estate insolvencies are summarised in the following paragraphs:

2.9. Chitra Sharma v. Union of India (Supreme Court, 2018)1

2.9.1.

olvency framework. Some important case laws relating to real estate insolvencies are summarised in the following paragraphs:

2.9. Chitra Sharma v. Union of India (Supreme Court, 2018)1

2.9.1. Background: At an early stage of the Jaypee Infratech insolvency, before the statutory recognition of homebuyers as the FCs, thousands of allottees found themselves without representation in the CoC and without an effective way to influence the resolution process. They had invested large sums in multiple projects, many of which had stalled. Parallel RERA and consumer proceedings had been initiated, but the imposition of a moratorium under Section 14 of the Code stayed enforcement against the CD, and there was apprehension that the

1 Writ Petition (Civil) Nos. 744, 782, 783, 803, 860 & 950-2017; 511-2018 & SLP (C) Nos. 24001, 24002, 36396 & 33267-2017

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insolvency process might culminate in outcomes adverse to homebuyers’ interests without affording them any meaningful voice.

2.9.2. Issues Raised: 2.9.2.1. Homebuyer-protection – How homebuyers’ interests should be protected in CIRPs admitted before the legislative amendments that recognised them as the FCs, particularly where they are a major stakeholder group in terms of quantum of funding. 2.9.2.2. RERA-IBC-deadlock – How to address the enforcement deadlock created when RERA orders and consumer decrees in favour of homebuyers become effectively unenforceable due to moratorium, without homebuyers having any countervailing procedural rights in the insolvency forum. 2.9.2.3.

rs and consumer decrees in favour of homebuyers become effectively unenforceable due to moratorium, without homebuyers having any countervailing procedural rights in the insolvency forum. 2.9.2.3. Interim-safeguards – What interim judicial safeguards are appropriate pending legislative correction to ensure that resolution plans do not strip homebuyers of possession rights or meaningful recovery. 2.9.3. Court’s View: The Hon’ble Supreme Court recognised that, in this transitional period, homebuyers were structurally disadvantaged. It directed interim safeguards such as ensuring that any prospective resolution plan explicitly provided for project completion and accounted for the legitimate interests of homebuyers, and that no resolution plan would be approved without taking into account their claims. The Court also signalled to the legislature the need for clearer statutory recognition of homebuyers in the IBC scheme, which was later implemented. Chitra Sharma case thus represents a bridging judgment that sought to mitigate harm to homebuyers pending comprehensive statutory reform.

2.10. Pioneer Urban Land & Infrastructure Ltd. v. Union of India (Supreme Court, 20192)

2.10.1. Background: Pioneer Urban Land and Infrastructure Limited and Anr. filed writ petitions before the Hon’ble Supreme Court challenging the constitutional validity of the 2018 Amendment to the Code.

. Background: Pioneer Urban Land and Infrastructure Limited and Anr. filed writ petitions before the Hon’ble Supreme Court challenging the constitutional validity of the 2018 Amendment to the Code. The Amendment classified homebuyers/allottees as "financial creditors" under Section 5(8)(f) and conferred rights to initiate CIRP under Section 7 and participate in the Committee of Creditors through authorised representatives. Before the 2018 amendment to the Code, homebuyers were not expressly recognised as “financial creditors”. As a result, applications filed by them under Sections 7 or 9 were often rejected on the ground that their complaints were in the nature of consumer or contractual disputes, rather than financial defaults. In the Pioneer Urban context, multiple groups of allottees challenged this legal position, arguing that the money they had advanced for flats was effectively a source of finance for the project and should be treated as such. They also pointed to the fact that, once

2 Writ Petition (Civil) No. 43-2019 and other petitions

nced for flats was effectively a source of finance for the project and should be treated as such. They also pointed to the fact that, once

2 Writ Petition (Civil) No. 43-2019 and other petitions

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CIRP was initiated by banks, they were left without any voice in the CoC, even though their aggregate contribution frequently exceeded that of institutional lenders. These concerns came before the Hon’ble Supreme Court through writ petitions challenging the constitutional validity of the amendments that classified allottees as FCs and conferred upon them a right to be represented and to vote in the CoC.

2.10.2. Issues Raised:

2.10.2.1. Creditor-status – Whether amounts paid by homebuyers to a real estate developer under Builder–Buyer Agreements should be treated as “financial debt” under Section 5(8)(f), thereby conferring upon such homebuyers the legal status of FCs with all associated rights under the Code, including initiation of CIRP and participation in CoC decisions.

2.10.2.2. Homebuyer-representation – Whether, given the large number and dispersed nature of homebuyers, the Code could practically and lawfully accommodate their participation in the CoC through ARs, and whether such a model would be consistent with the principles of efficient decision-making under the IBC framework.

2.10.2.3.

lawfully accommodate their participation in the CoC through ARs, and whether such a model would be consistent with the principles of efficient decision-making under the IBC framework.

2.10.2.3. Remedy-concurrency – Whether the availability or use of statutory remedies under RERA or the Consumer Protection Act by homebuyers extinguishes, limits, or otherwise affects their right to invoke the Code, or whether the three regimes operate concurrently up to the stage of admission of a CIRP application.

2.10.2.4. Decree-effect – Whether the grant of a decree or recovery certificate in favour of an allottee by a RERA authority or consumer forum converts or alters the character of the underlying obligation in a manner that would either bar or automatically confer FC status under the Code, and how such decrees should be treated within the insolvency process.

2.10.3. Court’s View: The Hon’ble Supreme Court held that the monies advanced by homebuyers have all the attributes of a financial debt because they are disbursed against the consideration for time-bound delivery of a flat or apartment, thereby involving a time value of money. The Court upheld the constitutional validity of the amendments that classified allottees as FCs and confirmed that they can initiate CIRP under Section 7 and participate in the CoC through ARs.

ey. The Court upheld the constitutional validity of the amendments that classified allottees as FCs and confirmed that they can initiate CIRP under Section 7 and participate in the CoC through ARs. It further clarified that remedies under RERA and the Consumer Protection Act are concurrent with the Code up to admission, and that a RERA or consumer decree does not deprive an allottee of the right to be treated as an FC in insolvency proceedings, provided the underlying transaction meets the statutory definition.

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2.11. Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. (Supreme Court, 2021)3

2.11.1. Background: The Jaypee Infratech Limited (JIL) CIRP involved a large expressway- concessionaire and real estate developer with about 20,000 homebuyers and numerous lenders. A resolution plan submitted by NBCC (India) Ltd. was approved by an overwhelming CoC majority, including the AR of homebuyers. However, certain homebuyers’ associations, including the Kensington Boulevard Apartments Welfare Association, and some home loan banks challenged the plan. Their concerns related to the adequacy of safeguards for possession, the distribution of value among different categories of creditors, and concerns regarding indirect benefits or influence of the erstwhile promoters in the post-resolution structure. The matter reached the Hon’ble Supreme Court, which had to balance the expectations of homebuyers, the claims of secured lenders, and the statutory scheme prioritising creditor- majority decisions.

2.11.2.

reached the Hon’ble Supreme Court, which had to balance the expectations of homebuyers, the claims of secured lenders, and the statutory scheme prioritising creditor- majority decisions.

2.11.2. Issues Raised: 2.11.2.1. Commercial-wisdom – Whether, and to what extent, courts and tribunals can interfere with, modify, or substitute the decisions of the CoC in relation to approval of resolution plans, especially where homebuyers contend that the commercial allocation of value is unfair or does not fully protect their possession rights. 2.11.2.2. Promoter-disqualification – How Section 29A of the Code should be implemented in complex group situations, and whether entities connected to the defaulting promoters can, directly or indirectly, regain control of the CD through resolution plans or implementation structures, thereby undermining the disqualification regime. 2.11.2.3. Priority-allocation – Whether homebuyers, by virtue of their number and the nature of their claims, are entitled to special or superior treatment over other FCs in the distribution waterfall under a resolution plan, and whether the Court can mandate such preferential treatment in the guise of equitable relief. 2.11.2.4. Timeline-discipline – How strictly the statutory outer limit for completion of CIRP (then 330 days) should be enforced in large and litigated real estate cases, and whether prolonged challenges by different stakeholders can justify extension of the process beyond that outer limit. 2.11.3.

days) should be enforced in large and litigated real estate cases, and whether prolonged challenges by different stakeholders can justify extension of the process beyond that outer limit. 2.11.3. Court’s View: The Hon’ble Supreme Court reaffirmed that the “commercial wisdom” of the CoC is paramount, and that judicial review of an approved resolution plan is confined to verifying statutory compliance, not reassessing commercial merits. It held that promoters disqualified under Section 29A cannot be permitted to regain control of the CD, directly or

3 Civil Appeal No. 3395 of 2020

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indirectly, through the resolution mechanism. The Court rejected attempts to impose judicially crafted payment preferences in favour of homebuyers that would disturb the statutorily envisaged creditor equality, and emphasised adherence to the statutory timelines. While sensitive to the plight of homebuyers, the Court underscored that their interests must be pursued within the institutional processes established by the Code rather than through ad hoc judicial adjustments to the commercial bargain reached by the CoC. The Court extended the CIRP timeline by 90 days (in exceptional circumstances given 20,000 homebuyers and substantial partial completion of projects) rather than allowing liquidation.

2.12. IL&FS Financial Services Ltd. v. HDFC Bank Ltd. (Supreme Court, 2023)4

2.12.1.

given 20,000 homebuyers and substantial partial completion of projects) rather than allowing liquidation.

2.12. IL&FS Financial Services Ltd. v. HDFC Bank Ltd. (Supreme Court, 2023)4

2.12.1. Background: In the IL&FS group resolution, certain subsidiaries had entered into escrow arrangements with HDFC Bank, under which funds were channelled into designated accounts to secure specific obligations, such as bond repayments or structured payments to particular creditors. When insolvency proceedings and group restructuring commenced, the RP asserted that the balances in these escrow accounts formed part of the CD’s estate and should be subject to the moratorium and overall resolution strategy. HDFC Bank maintained that the escrow funds were ring-fenced and constituted trust property held for specified beneficiaries and could not be appropriated for general creditor distribution.

2.12.2. Issues Raised: 2.12.2.1. Escrow-characterisation – Whether funds lying in escrow accounts created under pre-existing contractual arrangements are to be treated as property of the CD for the purposes of Section 14 and the resolution estate, or whether they are held in a fiduciary or trust- like capacity for identified beneficiaries. 2.12.2.2. Moratorium-scope – Whether the moratorium imposed under Section 14 of the Code can override or suspend rights arising under escrow and trust arrangements, thereby permitting the RP or creditors to access and apply such funds for general CIRP purposes. 2.12.2.3.

4 of the Code can override or suspend rights arising under escrow and trust arrangements, thereby permitting the RP or creditors to access and apply such funds for general CIRP purposes. 2.12.2.3. Ring-fencing – To what extent contractual ring-fencing of funds, especially where they are intended to protect specific creditors or project stakeholders, should be respected during insolvency, and whether such arrangements are compatible with the pari passu and collective principles of the IBC. 2.12.3. Court’s View: The Hon’ble Supreme Court held that properly constituted escrow accounts can give rise to a form of trust or fiduciary arrangement under which the funds are effectively segregated from the general assets of the CD. It concluded that monies standing to the credit of such escrows are not unencumbered property of the debtor and therefore do not

4 Civil Appeal No(s). 4708 OF 2022

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automatically fall within the moratorium’s ambit as assets available for general creditor distribution. The Court ruled that Section 14 does not nullify or rewrite contractual rights of third parties in respect of property that is not beneficially owned by the CD. By recognising the integrity of escrow structures, the judgment affirms the principle of ring-fencing and has direct resonance for RERA-mandated project escrows, reinforcing the protection of homebuyer funds even where the developer is undergoing insolvency.

2.13. Vishal Chelani & Ors. v. Debashis Nanda5 (Supreme Court, 2023)

2.13.1.

d project escrows, reinforcing the protection of homebuyer funds even where the developer is undergoing insolvency.

2.13. Vishal Chelani & Ors. v. Debashis Nanda5 (Supreme Court, 2023)

2.13.1. Background: Canara Bank filed a Section 7 IBC application against Bulland Buildtech Pvt. Ltd., which was admitted by NCLT, commencing CIRP and appointing an IRP/RP. The appellants (including Vishal Chelani) were allottees in the Bulland “Elevates” project who had earlier approached UPRERA, obtained an order for refund with interest, and a recovery certificate under Section 40 of the UP RERA Act. After initiation of CIRP, these homebuyers lodged claims before the RP; however, the resolution plan classified and treated homebuyers who had UPRERA decrees differently (and less favourably) from other allottees who had not sought RERA relief. NCLT rejected their challenge to the plan, and NCLAT upheld NCLT’s view, accepting the RP’s proposal to treat them in a distinct category on the footing that they were decree-holders and no longer “homebuyers in a class”.

2.13.2. Issues Raised 2.13.2.1. Homebuyer-classification- Whether homebuyers who have obtained a refund order and recovery certificate from UPRERA cease to be “allottees”/homebuyers in a class and instead become a separate category of FCs (or decree-holders) for the purposes of the CIRP and resolution plan under the IBC. 2.13.2.2.

rom UPRERA cease to be “allottees”/homebuyers in a class and instead become a separate category of FCs (or decree-holders) for the purposes of the CIRP and resolution plan under the IBC. 2.13.2.2. Differential Treatment- Whether the RP and CoC can, in a resolution plan, validly differentiate between (a) homebuyers who pursued RERA and obtained decrees and (b) other similarly placed homebuyers, thereby giving substantially different payouts to these sub- groups. 2.13.2.3. Decree Status- How Section 5(8)(f) IBC (residual “financial debt”), read with the homebuyer amendments, and prior Supreme Court precedents on recovery certificates as financial debt apply to homebuyers who have obtained RERA decrees. 2.13.3. Court’s View: The Hon’ble Supreme Court held that an allottee/homebuyer who has secured a refund decree and recovery certificate under RERA continues to be an FC within the same class of homebuyers; mere conversion of the underlying claim into a decree does not change the essential character of the debt or the creditor. On a plain reading of Section 5(8)(f)

5 Civil Appeal No. 3806 of 2023

; mere conversion of the underlying claim into a decree does not change the essential character of the debt or the creditor. On a plain reading of Section 5(8)(f)

5 Civil Appeal No. 3806 of 2023

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IBC, the Court found no legislative basis to carve out sub-classes of FCs within homebuyers and specifically rejected the proposition that RERA decree-holding homebuyers could be treated as a separate, inferior category in the resolution plan. Relying on its earlier decision that liabilities arising from recovery certificates constitute “financial debt”, the Court clarified that while such certificate-holders are FCs, their status as homebuyers in a class remains intact, and therefore parity of treatment with other homebuyers in the plan is required. Consequently, the Hon’ble Supreme Court set aside the NCLAT order, which had affirmed the differential treatment and held that the resolution plan could not discriminate against RERA decree-holding homebuyers vis-à-vis other allottees, thereby affirming equal treatment of all homebuyers under the IBC framework.

2.14. Elegna Co-operative Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Company Ltd. & Anr. (2026)6

2.14.1. Background: The appeals arose from a real estate insolvency involving a substantially completed residential-cum-commercial project, Takshashila Elegna, developed by Takshashila Heights India Pvt. Ltd. An FC-initiated proceedings under Section 7 of the Code, after defaults under restructured loan arrangements.

ommercial project, Takshashila Elegna, developed by Takshashila Heights India Pvt. Ltd. An FC-initiated proceedings under Section 7 of the Code, after defaults under restructured loan arrangements. The NCLT declined admission, holding that the IBC was being invoked as a recovery mechanism and that insolvency would prejudice homebuyers in a largely completed project. The NCLAT reversed this decision and admitted CIRP, while rejecting an intervention application filed by a cooperative society representing homebuyers from one tower of the project. The society and the CD separately appealed to the Supreme Court.

2.14.2. Issues Raised:

2.14.2.1. Admission of CIRP in real estate projects – Whether a Section 7 application can be refused on grounds of project viability, substantial completion, or potential prejudice to homebuyers, notwithstanding the existence of debt and default.

2.14.2.2. Recovery versus resolution – Whether invocation of IBC by an asset reconstruction company, alongside SARFAESI and DRT proceedings, amounts to misuse of the Code as a recovery tool.

2.14.2.3. Homebuyer participation and locus – Whether a cooperative housing society or association of allottees has a right to intervene in Section 7 proceedings or related appeals, particularly at the pre-admission stage.

6 Civil Appeal Nos. 10261 and 10012 of 2025

society or association of allottees has a right to intervene in Section 7 proceedings or related appeals, particularly at the pre-admission stage.

6 Civil Appeal Nos. 10261 and 10012 of 2025

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2.14.2.4. Balancing creditor rights and homebuyer interests – How the objectives of resolution and revival under the IBC interact with the completion-centric expectations of homebuyers in real estate projects.

2.14.3. Court’s View: The Hon’ble Supreme Court reaffirmed that the trigger for admission under Section 7 of the IBC is the existence of a financial debt and the occurrence of default, and that once these conditions are established, admission is mandatory. Considerations such as project viability, stage of construction, availability of receivables, or potential hardship to homebuyers are extraneous at the admission stage and fall within the domain of the Committee of Creditors at later stages.

2.14.4. The Court further held that the mere fact that the FC had earlier pursued remedies under SARFAESI or before the DRT does not render the invocation of the IBC impermissible. Parallel remedies are legally permissible, and unless malaise intent or abuse of process is established under Section 65 of the Code, a Section 7 application cannot be rejected on this ground alone.

2.14.5. On homebuyer participation, the Court held that proceedings under Section 7 remain in personam until admission, and that third-party intervention at the pre-admission stage is not a matter of right.

n homebuyer participation, the Court held that proceedings under Section 7 remain in personam until admission, and that third-party intervention at the pre-admission stage is not a matter of right. A cooperative society or association of allottees does not automatically acquire locus to intervene at this stage, particularly when the Code provides a structured mechanism for collective representation of homebuyers as FCs after admission through authorised representatives in the CoC.

2.14.6. Directions issued by the Court: With a view to advancing transparency, ensuring accountability, and safeguarding the interests of homebuyers, the following directions were issued by the Court:

2.14.6.1. The Information Memorandum shall mandatorily disclose comprehensive and complete details of all allottees.

2.14.6.2. Where the Committee of Creditors, upon due consideration, finds it not viable to approve handover of possession in terms of Regulation 4E of the CIRP Regulations, it shall mandatorily record cogent and specific reasons in writing for such a decision.

2.14.6.3. Any recommendation for liquidation by the Committee of Creditors shall be accompanied by a reasoned justification recorded in writing, evidencing proper application of mind and due consideration of all viable alternatives, in consonance with the objective of the Code.

accompanied by a reasoned justification recorded in writing, evidencing proper application of mind and due consideration of all viable alternatives, in consonance with the objective of the Code.

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2.15. Alok Sharma (AR of Homebuyers) v. IP Construction Pvt. Ltd. (NCLAT, 2020)7

2.15.1. Background: In the “Coral Brio” project developed by IP Construction Pvt. Ltd., a large number of homebuyers had paid the full sale consideration for their property bookings as early as 2015. However, due to disputes with lenders and regulatory issues, registered sale deeds were not executed, and possession was only partially handed over. Upon commencement of CIRP in 2019, the Resolution Professional took the view that executing conveyances in favour of fully paid allottees would diminish the value of the estate and prejudice other creditors. The authorised representative, Alok Sharma, challenged this stance, arguing that the allottees had acquired equitable ownership and that it would be inequitable and contrary to the Code’s objectives to keep them indefinitely in limbo. 2.15.2. Issues Raised: 2.15.2.1. Equitable-ownership – Whether fully paid-up homebuyers acquire an equitable interest in their units that should be recognised and respected during CIRP, including by permitting execution of registered sale deeds despite the moratorium. 2.15.2.2.

uyers acquire an equitable interest in their units that should be recognised and respected during CIRP, including by permitting execution of registered sale deeds despite the moratorium. 2.15.2.2. RP-discretion – How far the RP’s discretion extends in determining whether to execute conveyances or to treat the units as part of the common insolvency estate, and what principles should guide that discretion in real estate contexts. 2.15.2.3. Moratorium-limits – Whether the Section 14 moratorium prevents the formalisation of pre-existing rights in favour of homebuyers who have already substantially fulfilled their financial obligations. 2.15.2.4. AR-advocacy – What role an authorised representative should play in advocating for such rights, including the coordination of class claims and presentation of equitable considerations to appellate fora. 2.15.3. Court’s View: NCLAT held that, where homebuyers have paid the entire sale consideration and the only remaining act is execution of the sale deed, their equitable rights should not be subordinated indefinitely to the abstract goal of preserving the estate. The court directed that the Resolution Professional can and should execute sale deeds in such cases, subject to legitimate claims of secured creditors from that project being adequately safeguarded. It clarified that the moratorium does not prevent the recognition or completion of pre-existing rights in favour of stakeholders who are not seeking fresh enforcement, but the formalisation of what has already been earned.

atorium does not prevent the recognition or completion of pre-existing rights in favour of stakeholders who are not seeking fresh enforcement, but the formalisation of what has already been earned. This decision underscores that the Code’s objective of revival must be balanced with the legitimate expectations of fully compliant homebuyers.

7 Company Appeal (AT) (Insolvency) No. 350 of 2020

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2.16. Rajib Biswas v. Arena Superstructures Pvt. Ltd. (NCLAT, 2023)8

2.16.1. Background: In the Lotus Arena CIRP, a group of homebuyers led by Rajib Biswas raised concerns about the functioning of the authorised representative, alleging that he had not adequately explained the resolution plan, had not convened meaningful interactions, and had failed to effectively convey the class’s concerns to the CoC. They also complained about opacity in claim verification and how voting shares were allocated. These grievances were symptomatic of broader anxieties about whether homebuyers, as a class, were genuinely able to exercise their rights under the Code through the AR mechanism.

2.16.2. Issues Raised: 2.16.2.1. AR-role – What the substantive role of an authorised representative for homebuyers should be in a real estate CIRP, and whether the AR is expected to provide active advice and engagement or merely to transmit documents and record votes. 2.16.2.2.

ed representative for homebuyers should be in a real estate CIRP, and whether the AR is expected to provide active advice and engagement or merely to transmit documents and record votes. 2.16.2.2. Informed-consent – How the Code’s requirement of class voting through an AR can be reconciled with the practical need to ensure that homebuyers actually understand the structure and consequences of the resolution plan before their votes are cast. 2.16.2.3. Transparency – What standards of transparency and record-keeping are required in relation to consultations between the AR and homebuyers, and in the communication of homebuyer feedback to the CoC and the Resolution Professional. 2.16.2.4. Class Finality vs. Individual Decree Rights – Can homebuyers with RERA recovery certificates override class decisions made by authorised representatives and seek individual refunds or differential treatment. 2.16.2.5. Status of Decree Holders in CIRP – Are homebuyers with RERA decrees a separate class or integrated within the broader homebuyer class for CIRP purposes. 2.16.2.6. Decretal Amount Claims vs. Plan Provisions – Where approved plans contain refund provisions for allottees seeking cancellation, can decree holders demand full decretal amounts as precedent conditions, or must they accept plan-prescribed treatment. 2.16.3. Court’s View: NCLAT held that the authorised representative is not a mere post-box but a fiduciary tasked with safeguarding the interests of the class.

hey accept plan-prescribed treatment. 2.16.3. Court’s View: NCLAT held that the authorised representative is not a mere post-box but a fiduciary tasked with safeguarding the interests of the class. The Tribunal stated that the AR must, to the extent practicable, organise consultations, explain the key features of proposed plans in simple terms, and ensure that voting directions reflect an informed decision of the homebuyers. It further directed that the AR should maintain records of such consultations and ensure that material concerns of the class are placed before the CoC. While not disturbing the

8 Company Appeal (AT) (Ins) No. 1488 of 2022 & I.A. No. 4701 of 2022

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CIRP outcomes already achieved, NCLAT used this case to lay down clear behavioural expectations from ARs, which have prospective value for all real estate CIRPs. The Tribunal emphasised that individual circumstances, including decree-holder or RERA recovery certificate status, do not create a separate class or override the collective decision-making mechanism under the Code. Since the resolution plan already provided a structured mechanism for allottees seeking voluntary exit to claim refund the Tribunal held that no separate directions were warranted and that the application had become infructuous.

2.17. Sabari Realty Pvt. Ltd. v. Sivana Realty Pvt. Ltd. (NCLAT, 2023)9

2.17.1. Background: In the CIRP of Sivana Realty Pvt.

ns were warranted and that the application had become infructuous.

2.17. Sabari Realty Pvt. Ltd. v. Sivana Realty Pvt. Ltd. (NCLAT, 2023)9

2.17.1. Background: In the CIRP of Sivana Realty Pvt. Ltd., the approved resolution plan classified homebuyers into “affected” and “unaffected” categories, primarily based on whether the units they had booked were subject to live mortgages without lender NOCs. Affected allottees faced certain compromises on their entitlements due to unresolved title risks, while unaffected allottees received relatively more straightforward treatment. A minority of homebuyers challenged this classification, contending that, as allottees registered under RERA, they should be treated identically, irrespective of underlying encumbrances.

2.17.2. Issues Raised: 2.17.2.1. Differential-treatment – Whether a resolution plan may validly provide for differential treatment among homebuyers based on objective factors such as the existence of subsisting mortgages, lender NOCs, or other encumbrances affecting particular units. 2.17.2.2. RERA-vs-security – How RERA allotments and registration interact with the security interests of FCs in the same underlying property, and whether RERA status alone can override the commercial and legal realities of such encumbrances in the context of a resolution plan. 2.17.2.3. CoC-autonomy – The extent to which the CoC is free to design nuanced and fact-specific treatment structures within a creditor class, and the limits, if any, that equality and fairness principles impose on such classification.

which the CoC is free to design nuanced and fact-specific treatment structures within a creditor class, and the limits, if any, that equality and fairness principles impose on such classification. 2.17.2.4. Binding-effect – Whether such classifications bind dissenting or minority homebuyers once a plan is approved by the requisite majority and found compliant with Section 30(2) of the Code. 2.17.3. Court’s View: NCLAT upheld the plan, finding that the classification between affected and unaffected homebuyers was grounded in real and legally significant differences in title risk and security position. It held that the Code does not require uniform treatment where factual circumstances demonstrate material distinctions within a creditor category, provided the

9 Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023

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classification is rational and not arbitrary. The Tribunal observed that RERA registration affords important protections but does not automatically displace the rights of secured creditors or the commercial wisdom of the CoC in structuring risk allocation. It reiterated that, once a resolution plan meeting statutory requirements is approved, all stakeholders, including dissenting homebuyers, are bound by its terms. This decision reinforces CoC autonomy to design sophisticated solutions in complex capital structures, even where such solutions entail differentiated outcomes among homebuyers.

2.18. Jaypee Greens Krescent Homes Buyers Welfare Association v. Jaypee Infratech Ltd.

ns in complex capital structures, even where such solutions entail differentiated outcomes among homebuyers.

2.18. Jaypee Greens Krescent Homes Buyers Welfare Association v. Jaypee Infratech Ltd. (NCLT, 2019)10

2.18.1. Background: Within the broader Jaypee Infratech CIRP, homebuyers in the “Krescent Homes” project formed an association and approached the NCLT with complaints concerning the claim verification process and the functioning of their authorised representative. They pointed out that numerous genuine homebuyer claims had been rejected or discounted by the Resolution Professional on technical grounds, such as minor payment defaults or documentation deficiencies, and that the authorised representative had not effectively challenged these determinations or adequately explained their consequences to the affected allottees.

2.18.2. The association emphasised that the rejection or reduction of claims directly affected the computation of voting shares in the CoC and hence the collective negotiating power of homebuyers. They contended that both the RP and the AR owed heightened duties of transparency and diligence in such a large and complex real estate insolvency.

2.18.3. Issues Raised: 2.18.3.1. Claim-verification – What processes and safeguards should govern the verification of homebuyer claims in large real estate CIRPs, particularly with respect to opportunities to cure defects and the obligation to provide reasoned orders for claim rejection or reduction. 2.18.3.2.

of homebuyer claims in large real estate CIRPs, particularly with respect to opportunities to cure defects and the obligation to provide reasoned orders for claim rejection or reduction. 2.18.3.2. AR-diligence – To what extent an authorised representative is expected to scrutinise the claim decisions of the Resolution Professional, raise objections where appropriate, and ensure that the homebuyers’ class is fully informed about the status and implications of claim adjudication.

10 CA No.223-2018 and CA No. 266-2018 in CP No. (IB) 77-ALD-2017

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2.18.3.3. Voting-share-impact – How errors or shortcomings in claim verification and AR performance can undermine the fairness of CoC voting by diluting the legitimate voting strength of homebuyers as a class. 2.18.4. Court’s View: The NCLT held that the RP must adopt transparent, fair, and participative procedures for claim verification, especially where tens of thousands of allottees are concerned. It directed that speaking orders be provided, that opportunities to cure defects be afforded, and that orders be issued in respect of any rejected or reduced claims. The Tribunal further stressed that the authorised representative has a positive duty to review and question claim determinations where warranted, as part of his fiduciary role to the class. This order gave concrete operational content to the general principles articulated in the Pioneer case concerning homebuyer participation.

2.19. M/s. Dhankalash Distributors Private Limited v. Arena Superstructures Pvt. Ltd.

ational content to the general principles articulated in the Pioneer case concerning homebuyer participation.

2.19. M/s. Dhankalash Distributors Private Limited v. Arena Superstructures Pvt. Ltd. (NCLT, 2023)11

2.19.1. Background: The “Lotus Arena” project in Noida involved 858 homebuyers and substantial dues to the NOIDA development authority. When CIRP was initiated against the developer, several practical difficulties emerged. Claims from homebuyers continued to be filed beyond the initial timelines, creating uncertainty about the total liability. There were also disputes about the precise quantum and treatment of the authority’s dues and about how the authorised representative for homebuyers was conducting consultations and explaining the plan.

2.19.2. A resolution plan was approved, the central feature of which was delivery of completed flats to homebuyers, with monetary adjustments only in limited scenarios. The plan’s success presupposed that NOIDA would cooperate in the revalidation of approvals and that the universe of claims would be stabilised.

2.19.3. Issues Raised: 2.19.3.1. Belated-claims – How the insolvency process should deal with homebuyer claims submitted after the stipulated timelines, and whether such belated claims can be admitted on the same footing as timely claims without prejudicing the certainty required by resolution applicants and other creditors.
2.19.3.2.

timelines, and whether such belated claims can be admitted on the same footing as timely claims without prejudicing the certainty required by resolution applicants and other creditors.
2.19.3.2. Authority-coordination – How dues and statutory functions of development authorities such as NOIDA should be integrated into resolution plans, including whether such

11 IA No.3392, 4615 & 5361(PB)-2021, IA No. 3556 & 5979-2022, Ivn. P-04-2023 in CP (IB) No.875(PB)-2020

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authorities are bound to revalidate approvals in support of an NCLT-approved plan and how their claims should be treated relative to FCs and homebuyers. 2.19.3.3. AR-accountability – What standards of conduct and engagement are expected from an authorised representative of homebuyers in large real estate CIRPs, particularly in terms of explaining complex commercial terms, collating feedback, and ensuring informed voting by the class. 2.19.3.4. In-kind-distribution – Whether resolution plans may legitimately provide that homebuyers receive value primarily through the allotment and completion of flats, rather than through monetary recovery, and how this approach fits within the framework of Sections 30 and 31 of the Code. 2.19.4. Court’s View: The NCLT approved the plan, emphasising that, in a residential real estate context, completion and delivery of flats often constitute the most appropriate form of relief for homebuyers.

urt’s View: The NCLT approved the plan, emphasising that, in a residential real estate context, completion and delivery of flats often constitute the most appropriate form of relief for homebuyers. It held that a reasonable claim cut-off is necessary for plan feasibility and that belated claims may be treated differently, provided the criteria are transparent and non-arbitrary. The Tribunal directed NOIDA to cooperate in the implementation of the approved plan, including in the revalidation of approvals, while clarifying that the authority’s legitimate dues would be dealt with as per the plan. On the role of the AR, the NCLT stressed that he must actively facilitate understanding among homebuyers and not merely circulate documents, thereby reinforcing the emerging jurisprudence on AR duties.

2.20. Whispering Towers Flat Owners Association v. Abhay Narayan Manudhane (RP of HDIL) (NCLT,2024)12

2.20.1. Background: HDIL, a large real estate and infrastructure developer, entered CIRP with more than two dozen stalled and semi-complete projects. Over several years, repeated attempts to attract a resolution applicant for the company as a whole failed. Meanwhile, distinct projects such as “Whispering Towers” had their own financial profiles, land arrangements, and homebuyer bases. The flat owners’ association of Whispering Towers argued that they should not remain indefinitely hostage to the fate of the entire corporate group and requested that the project be treated as a distinct vertical, capable of independent resolution.

2.20.2.

they should not remain indefinitely hostage to the fate of the entire corporate group and requested that the project be treated as a distinct vertical, capable of independent resolution.

2.20.2. The RP and CoC considered a proposal to split the assets and liabilities of HDIL into multiple “verticals” corresponding to individual projects or clusters. This approach required judicial endorsement to ensure its compatibility with the Code, particularly in respect of creditor claims and asset allocation.

12 I.A. 1045 of 2023 In C.P. No. (IB) 27/MB/C-III/2019

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2.20.3. Issues Raised: 2.20.3.1. Vertical-segregation – Whether the Code permits the division of a single CD’s assets and liabilities into separate project-wise or vertical-wise resolution units, each with its own information memorandum and creditor constitution, without resorting to a formal group insolvency framework. 2.20.3.2. Project-viability – How to ensure that projects which are individually viable and capable of attracting resolution applicants are not indefinitely stalled because no bidder is willing to assume the aggregated risk of the entire portfolio of the CD. 2.20.3.3. Creditor-alignment – How claims of creditors that span multiple projects, such as banks with cross-collateralised exposures, should be addressed when assets are segregated into verticals, and whether such segregation is compatible with fair and equitable treatment of similarly situated creditors. 2.20.3.4.

ed exposures, should be addressed when assets are segregated into verticals, and whether such segregation is compatible with fair and equitable treatment of similarly situated creditors. 2.20.3.4. Homebuyer-relief – Whether project-wise segregation can accelerate relief for homebuyers in particular projects without undermining the collective insolvency process for the CD as a whole. 2.20.4. Court’s View: The NCLT accepted that, in the specific circumstances of HDIL, it was both permissible and desirable to adopt a project-wise vertical approach to resolution. It held that the Code does not insist on an “all or nothing” resolution of a CD’s entire business and that, where factual circumstances demonstrate divergent viability across projects, vertical bifurcation can further the objective of value maximisation and timely relief. The court authorised the preparation of separate information memorandum and the constitution of project-specific creditor groups for the purposes of inviting resolution plans. In doing so, it recognised that the interests of homebuyers in individual projects may be better served by allowing those projects to move ahead independently, rather than awaiting a comprehensive and possibly unattainable group solution.
Report of the Committee to examine the issues related to Legacy Stalled Real Estate Projects 2.21. The Ministry of Housing and Urban Affairs (MoHUA) had constituted a high-level Expert Committee under the Chairmanship of Mr.

xamine the issues related to Legacy Stalled Real Estate Projects 2.21. The Ministry of Housing and Urban Affairs (MoHUA) had constituted a high-level Expert Committee under the Chairmanship of Mr. Amitabh Kant, G-20 Sherpa and former CEO of NITI Aayog, vide Order dated 31 March 2023, following a decision made at the 3rd meeting of the Central Advisory Council (CAC) held on 12 April 2022 under the Chairmanship of the Hon'ble Minister of Housing and Urban Affairs. The Committee's mandate was to holistically examine all issues related to legacy stalled real estate projects and recommend practical, implementable measures for their completion and timely handover of homes to homebuyers.

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2.22. The Committee's deliberations across substantive meetings with diverse stakeholders like State Authorities, RERA, developers, homebuyer associations, banks, and financial institutions identified critical systemic failures which are summarised, as follows:

2.22.1. Lack of Financial Viability: The primary root cause was insufficient project viability caused by cost overruns, time delays, and accumulated interest/penalties, which made projects economically unrecoverable for developers and unattractive to financiers.

2.22.2. Inadequate IBC Efficacy: Since the enactment of the Code, approximately 340 real estate cases had been referred to NCLT, yet only 31 had been resolved by 2023, with the process proving prohibitively slow and destructive of asset value.

ctment of the Code, approximately 340 real estate cases had been referred to NCLT, yet only 31 had been resolved by 2023, with the process proving prohibitively slow and destructive of asset value. Under IBC, both financial and operational creditors absorb haircuts while developers' equity is written off, yet even senior creditors (such as land authorities) recover only approximately 27% of their dues, according to a Cushman and Wakefield study cited by the Committee.

2.22.3. Overlapping Stakeholder Interests and Regulatory Gaps: The convergence of diverse and often divergent interests—developers facing cost pressures, banks reluctant to cede charge to SWAMIH, land authorities losing revenue due to moratoriums, and homebuyers lacking recourse, created gridlock that neither RERA regulations nor IBC processes could efficiently resolve.

2.22.4. Structural Barriers to Resolution: Administrative hurdles (NOCs, completion certificates), punitive policies (capitalised interest, time extension charges, penal interest), absence of project-wise resolution frameworks, and the exclusion of genuine homebuyer voices from resolution decisions prevented pre-insolvency rehabilitation.

2.23.

on charges, penal interest), absence of project-wise resolution frameworks, and the exclusion of genuine homebuyer voices from resolution decisions prevented pre-insolvency rehabilitation.

2.23. The Committee concluded that all stakeholders, including developers, financial institutions, land authorities, and government, must collectively accept equitable (pari-passu) haircuts to restore project financial viability, and crucially, that the Code should be employed only as a measure of last resort, with priority given to structured rehabilitation and specialised frameworks. The Committee's recommendation framework was explicitly organised into seven coordinated pillars. The detailed recommendations (refer to paragraph 8, page 2 of the main Report) are placed at ANNEXURE C of this Report.

2.24. This Committee has carefully examined the findings and recommendations of the Amitabh Kant Committee Report. This Committee broadly reiterates and aligns itself with the Amitabh Kant Committee’s core approach, especially the emphasis on project-centric resolution, priority to completion over value extraction, equitable burden-sharing among stakeholders, and the recognition that the IBC should operate as a measure of last resort in the real estate sector.

reme Court in the Mansi Brar judgment: (a) If the agreement substitutes possession with a buyback or refund option, or any other special arrangement, the allottee is likely a speculative investor. (b) Insistence on a refund with high interest, coupled with refusal to accept possession, would indicate speculation. (c) Purchase of multiple units, especially in double digits, shall invite greater scrutiny, though it is not conclusive. If the terms of the agreement provide for possession or refund in the event of failure to give possession alone, this factor may not be held against the allottee. (d) Special rights, preferential treatment, or unusual privileges to the allottee would signal investment intent. (e) Deviation from the RERA Model Agreement shall be a crucial indicator as to the nature of the transaction – the greater the departure, the greater the likelihood of speculation. (f) Unrealistic interest rates and promises of 20 – 25% returns over a short duration are indicative of speculation.

3.22.2. All allottees recognised as FCs under the Code should continue to receive uniform statutory treatment, subject to existing threshold and procedural safeguards.

3.22.3. Concerns of misuse should be addressed through process safeguards, including rigorous admission-stage scrutiny by the AA; enforcement of numerical thresholds under Section 7 of the Code; collective decision-making through the ARs and the CoC; careful evaluation of resolution plans to ensure homebuyer-centric outcomes.

nforcement of numerical thresholds under Section 7 of the Code; collective decision-making through the ARs and the CoC; careful evaluation of resolution plans to ensure homebuyer-centric outcomes.

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3.22.4. Strengthened homebuyer protection should be outcome-focused, by ensuring time- bound possession or fair refund through resolution plans; completion-first approaches to real estate insolvency; effective representation and consultation of homebuyers in the CIRP.

3.22.5. Judicial discretion should be preserved, allowing the AA to address egregious cases of abuse on a case-by-case basis, without embedding rigid classifications in subordinate legislation or guidelines. C. RERA–IBC Coordination and Regulatory Alignment C1. Strengthening Synergy and Coordination between RERA and the IBC Framework Issue Description 3.23. The real estate sector in India is governed by two distinct but intersecting statutory frameworks:

3.23.1. The RERA Act, which focuses on consumer protection, transparency, and regulation of real estate projects; and

3.23.2. The IBC, which provides a time-bound mechanism for the resolution of insolvency of corporate persons.

3.24. In real estate insolvency cases, both regimes often operate simultaneously over the same project, stakeholders, and factual matrix. However, the absence of structured institutional coordination between the RERA authorities and insolvency fora (NCLT/NCLAT/IBBI) has led to procedural friction, duplication of efforts, and uncertainty for stakeholders.

3.25.

red institutional coordination between the RERA authorities and insolvency fora (NCLT/NCLAT/IBBI) has led to procedural friction, duplication of efforts, and uncertainty for stakeholders.

3.25. Upon commencement of CIRP, management of the CD vests in the RP. In certain instances, questions have arisen regarding the manner in which continuing obligations under RERA, the rules framed thereunder, and directions issued by the concerned RERA Authority are to be complied with during the insolvency process. It has also been observed that parties sometimes proceed on the assumption that the initiation of insolvency proceedings may dilute or temporarily displace sectoral regulatory requirements, which can give rise to uncertainty and potential gaps in compliance. Existing Legal and Regulatory Status
3.26. The current legal framework treats RERA and the IBC as separate and independent statutes, each with distinct objectives and enforcement mechanisms:

3.26.1. RERA framework: RERA mandates registration of real estate projects, maintenance of escrow accounts, disclosure of project information, and adjudication of homebuyer grievances, including delays, refunds, and compensation.

ates registration of real estate projects, maintenance of escrow accounts, disclosure of project information, and adjudication of homebuyer grievances, including delays, refunds, and compensation.

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3.26.2. IBC framework: The IBC provides for collective insolvency resolution through a moratorium under Section 14 of the Code, appointment of an IP, constitution of the CoC, and approval of a resolution plan by the AA. Further, Section 17(2)(e) of the Code obligates the RP to ensure that the CD remains compliant with the requirements of all applicable laws during the conduct of the CIRP, including RERA compliance in case of real estate cases.
3.27. Stakeholders highlighted several operational challenges arising from the lack of RERA- IBC coordination:

3.27.1. Homebuyers and ARs reported conflicting directions from RERA authorities and RPs regarding possession, completion timelines, and refunds.

3.27.2. RPs noted difficulties in accessing accurate and updated project data, list of allottees, escrow balances, and approval status, all of which are maintained with RERA or local authorities.

3.27.3. RAs flagged uncertainty arising from post-approval regulatory demands, stop-work orders, or enforcement actions by RERA or planning authorities, which undermine resolution feasibility.

3.27.4. Regulators and public authorities acknowledged that RERA processes are often not calibrated to the timelines and exigencies of CIRP.

authorities, which undermine resolution feasibility.

3.27.4. Regulators and public authorities acknowledged that RERA processes are often not calibrated to the timelines and exigencies of CIRP. However, it was also flagged that the Code does not envisage any blanket suspension of sector-specific regulatory regimes by reason of insolvency. Accordingly, real estate projects that are registered under RERA continue to be governed by the statutory framework relating to registration, disclosures, utilisation of funds, and adherence to directions of the RERA. The commencement of CIRP, therefore, does not dilute the supervisory jurisdiction of RERA; rather, regulatory oversight and insolvency administration must operate in coordination to secure lawful and orderly project completion.

3.28. The Committee deliberated that the absence of coordination is a structural rather than legal gap and can be addressed through administrative and procedural mechanisms without statutory amendment. Analysis and Rationale 3.29. The Committee’s analysis rests on the following considerations:

3.29.1. Complementary objectives: RERA seeks to protect homebuyers and ensure project transparency, while the IBC seeks to revive distressed entities and maximise value. These objectives are aligned with real estate insolvency, where project completion is the preferred outcome.

ct transparency, while the IBC seeks to revive distressed entities and maximise value. These objectives are aligned with real estate insolvency, where project completion is the preferred outcome.

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3.29.2. Information asymmetry and duplication: RERA authorities maintain granular project-level data, while IPs are required to independently verify claims and project status, leading to duplication and delay.

3.29.3. Conflicting timelines and enforcement actions: RERA-imposed timelines, penalties, or enforcement actions may continue mechanically during CIRP, even where such actions are inconsistent with the moratorium or approved resolution plans.

3.29.4. Uncertainty for resolution applicants: Lack of regulatory clarity post-plan approval deters credible bidders and increases risk premiums, adversely affecting resolution outcomes.

3.29.5. Feasibility of non-statutory coordination: Structured coordination can be achieved through guidelines, SOPs, and institutional interfaces without diluting the statutory autonomy of either regime. 3.30. Recommendation Nos. 10, 11, 12, 13 and 14

3.30.1. Institutional consultation framework: IBBI should establish a formal consultation mechanism with Central and State RERA authorities for real estate insolvency matters, including periodic coordination meetings and designated nodal officers.

3.30.2. Information Sharing Protocols: Standardised protocols should be developed for: a. sharing RERA-registered project data, allottee lists, escrow details, and approval status with the RPs;

b.

30.2. Information Sharing Protocols: Standardised protocols should be developed for: a. sharing RERA-registered project data, allottee lists, escrow details, and approval status with the RPs;

b. recognising RERA records as authoritative inputs for insolvency processes, subject to verification.

3.30.3. RERA Compliances during CIRP: The Committee emphasises that the RP, who assumes the management and operations of the CD, should ensure that the requirements of the RERA Act, the rules and regulations made thereunder, and the directions issued by the concerned RERA authority are complied with during CIRP.

3.30.4. Role of RERA in Resolution and Monitoring: RERA authorities may be: a. enabled to nominate representatives in the COC meetings as observers; b. consulted during preparation and evaluation of resolution plans for regulatory feasibility and provided an opportunity, if they so wish, to submit their views on the same in writing;

bservers; b. consulted during preparation and evaluation of resolution plans for regulatory feasibility and provided an opportunity, if they so wish, to submit their views on the same in writing;

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c. represented in project monitoring committees post-plan approval to facilitate timely approvals and compliance. 3.30.5. Guidelines on Post-Resolution Regulatory Certainty: Clear guidance should be issued by RERAs to ensure that once a resolution plan is approved: a. Regulatory obligations are enforced prospectively; b. Past non-compliances are addressed in accordance with the plan, without reopening settled issues. C2. Uniformity and Harmonisation of RERA Rules and Standard Operating Procedures across States Issue Description 3.31. The Real Estate (Regulation and Development) Act, 2016 (RERA Act) was enacted as a central legislation to introduce transparency, accountability, and consumer protection in the real estate sector across India. However, while the Act lays down a common statutory framework, its implementation is carried out through State-specific Rules, Regulations, and Standard Operating Procedures (SOPs) notified by individual States and Union Territories.

3.32. Over time, significant divergence has emerged in how RERA is operationalised across States—particularly with respect to escrow mechanisms, project disclosures, timelines, enforcement practices, and regulatory processes.

divergence has emerged in how RERA is operationalised across States—particularly with respect to escrow mechanisms, project disclosures, timelines, enforcement practices, and regulatory processes. In the context of insolvency proceedings under IBC, these divergences create material challenges for the RPs, homebuyers, lenders, and RAs, especially where projects are subject to insolvency while remaining regulated under RERA. Existing Legal and Regulatory Position Central Framework with State-Level Variations 3.33. RERA establishes uniform obligations relating to project registration, disclosures, escrow account of project funds, and consumer remedies. However, Section 84 of the Act empowers States to frame Rules for implementation, resulting in substantial State-level variation in regulatory practices.

3.34. Illustrative examples of divergence include the following: (a) Escrow and Project Fund Management i. The central framework mandates the deposit of 70% of amounts realised from allottees into a project-specific account.

divergence include the following: (a) Escrow and Project Fund Management i. The central framework mandates the deposit of 70% of amounts realised from allottees into a project-specific account.

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ii. Tamil Nadu RERA has introduced a three-bank-account regime (collection, separate, and transaction accounts), imposing stricter fund-tracking requirements than most States. iii. Maharashtra RERA (MahaRERA) follows the 70% escrow norm but permits withdrawals based on certified progress, supported by a robust online disclosure system. Karnataka RERA requires separate escrow accounts for each registered project phase, preventing cross-phase fund diversion but significantly increasing account management complexity for multi-phase developments.
(b) Disclosure and Reporting Requirements i. MahaRERA mandates extensive, periodic disclosures through a centralised digital portal. ii. Several States follow less granular reporting standards, making it difficult for the RPs to access reliable and uniform project data. (d) Interest, Compensation, and Penalty Regimes i. Tamil Nadu RERA applies SBI MCLR-linked interest for delays. ii. Haryana RERA uses SBI’s highest lending rate as the benchmark. iii. Uttar Pradesh RERA follows a case-dependent approach. (e) Grievance Redressal and Enforcement Practices i. Some States require pre-litigation steps or follow distinct recovery mechanisms for RERA orders. ii. Disposal timelines and enforcement practices vary widely depending on tribunal capacity and administrative arrangements. 3.35.

n steps or follow distinct recovery mechanisms for RERA orders. ii. Disposal timelines and enforcement practices vary widely depending on tribunal capacity and administrative arrangements. 3.35. During consultations, stakeholders consistently highlighted the lack of uniformity in RERA practices as a key impediment:

3.35.1. RPs flagged difficulties in navigating divergent escrow norms, reporting formats, and approval requirements across States.

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3.35.2. RAs noted that regulatory uncertainty inflates risk premiums and discourages participation.

3.35.3. Homebuyer associations expressed concern that uneven enforcement leads to unequal protection for similarly placed allottees.

3.35.4. Public authorities and regulators acknowledged that while State autonomy must be preserved, insolvency situations warrant greater standardisation.

3.36. The Committee noted a broad consensus that harmonisation is essential, particularly for aspects directly affecting insolvency resolution. Analysis and Rationale 3.37. The Committee’s analysis rests on the following considerations:

3.37.1. Pan-India character of insolvency proceedings: The IBC operates uniformly across jurisdictions, while divergent RERA practices undermine consistency in resolution outcomes.

3.37.2. Need for regulatory predictability: Harmonised rules reduce uncertainty for RAs and improve the quality and viability of resolution plans.

3.37.3.

e consistency in resolution outcomes.

3.37.2. Need for regulatory predictability: Harmonised rules reduce uncertainty for RAs and improve the quality and viability of resolution plans.

3.37.3. Efficiency and speed: Standardised escrow norms, disclosures, and timelines enable faster verification, monitoring, and implementation.

3.37.4. Equitable homebuyer protection: Uniform practices ensure similarly placed homebuyers are treated consistently, irrespective of geography.

3.37.5. Federal feasibility: Harmonisation can be achieved through model rules, advisories, and coordinated SOPs without legislative amendment or encroachment on State powers. 3.38. Recommendation Nos. 15, 16 and 17

3.38.1. Model RERA SOPs be developed by MOHUA, in consultation with State RERA authorities, for aspects impacting insolvency proceedings, including escrow operation, disclosures, timelines, and treatment of stalled projects.

3.38.2. Harmonised treatment be adopted for projects under CIRP, particularly regarding extension of registrations, recalibration of timelines, and regulatory approvals.

3.38.3. Uniform data and disclosure standards are to be prescribed by RERAs to facilitate seamless integration with insolvency processes.

s, recalibration of timelines, and regulatory approvals.

3.38.3. Uniform data and disclosure standards are to be prescribed by RERAs to facilitate seamless integration with insolvency processes.

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D. Project-Wise Insolvency Framework D1. Project-Wise Admission of Corporate Insolvency Resolution Process in Real Estate Issue Description 3.39. Real estate development is intrinsically project centric. Developers typically undertake multiple projects concurrently, each resting on distinct land parcels, statutory approvals, escrow mechanisms, financing arrangements, construction timelines and homebuyer constituencies. Despite this operational reality, insolvency proceedings under the IBC are presently initiated against the real estate developer as a single CD, resulting in the commencement of a unified CIRP at the entity level.

3.40. This entity-centric admission leads to significant distortions in real estate insolvency. Default or distress in one project often results in solvent, completed, or near-completion projects being drawn into insolvency proceedings, even where such projects are independently viable and compliant. The consequences include disruption of ongoing construction, uncertainty for unrelated homebuyers, erosion of project value, and avoidable litigation. The issue assumes heightened importance in real estate due to the large number of individual homebuyers involved, whose interests are directly linked to specific projects rather than to the developer as a corporate entity.

3.41.

tance in real estate due to the large number of individual homebuyers involved, whose interests are directly linked to specific projects rather than to the developer as a corporate entity.

3.41. While post-admission project-wise resolution has evolved through regulatory flexibility and judicial innovation, the admission of CIRP continues to operate at the level of the CD. The Committee therefore examined whether the objectives of the Code would be better served by recognising project-wise admission of CIRP in real estate insolvency, rather than as a post- admission project-wise Resolution Plan option. Entity-Level Admission under the Code 3.42. The Code provides for the initiation of insolvency proceedings against a “corporate debtor” as a legal entity. There is no express statutory provision enabling admission of CIRP in respect of an individual real estate project. Consequently, admission of an application under Sections 7, 9 or 10 ordinarily results in commencement of CIRP against the developer as a whole, irrespective of whether the default pertains to one or to several projects.

3.43. This structure reflects the general design of the Code, which is sector-agnostic and entity-centric. However, in the real estate sector, this approach may not be ideal with the economic and regulatory reality that projects function as discrete units with ring-fenced cash flows and stakeholders.

. However, in the real estate sector, this approach may not be ideal with the economic and regulatory reality that projects function as discrete units with ring-fenced cash flows and stakeholders.

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Project-Wise Resolution under CIRP Regulations (Post-Admission) 3.44. Recognising the peculiarities of real estate insolvency, the CIRP Regulations introduced flexibility after admission of the CIRP. In particular, Regulation 36A(4A) enables the invitation of expressions of interest for one or more units or assets of the CD and has been extensively relied upon to invite project-specific resolution plans in real estate cases.

3.45. In addition, Regulations 37 and 38 permit resolution plans to provide for restructuring, transfer or reorganisation of assets and liabilities, including on a segmented or project-wise basis, subject to compliance with the Code. These provisions have allowed the RPs and the CoCs to structure project-wise resolution plans within an entity-level CIRP.

3.46. While these provisions have been instrumental in mitigating the rigidity of entity-level insolvency, they operate only after the CD has already been admitted into CIRP. They do not prevent solvent or unrelated projects from being drawn into insolvency ab-initio, nor do they provide certainty to homebuyers and other stakeholders at the admission stage. Interface with the RERA Framework 3.47.

or unrelated projects from being drawn into insolvency ab-initio, nor do they provide certainty to homebuyers and other stakeholders at the admission stage. Interface with the RERA Framework 3.47. Under the Real Estate (Regulation and Development) Act, 2016, each real estate project is registered and regulated as a distinct unit, with project-specific disclosures, escrow requirements and compliance obligations. Homebuyers’ rights, developer obligations and regulatory oversight are all anchored at the project level.

3.48. The current insolvency framework, which admits CIRP at the entity level and subsequently attempts project-wise segregation after admission for the purpose of resolution, therefore operates in strain with the present RERA architecture. The Committee noted that aligning insolvency admission itself with the project-centric logic of RERA would promote regulatory coherence and reduce uncertainty. Judicial and Practical Experience 3.49. Courts and Tribunals have repeatedly acknowledged that real estate insolvency presents unique challenges requiring project-centric solutions. In several landmark matters, judicial fora have facilitated project-wise interventions to protect homebuyers and ensure completion of viable projects. While these outcomes demonstrate judicial recognition of project-wise resolution as a desirable approach, they have largely been achieved through case-specific orders and court-supervised mechanisms. The Hon’ble Supreme Court in Mansi Brar Fernandes v.

project-wise resolution as a desirable approach, they have largely been achieved through case-specific orders and court-supervised mechanisms. The Hon’ble Supreme Court in Mansi Brar Fernandes v. Shubha Sharma has observed that real estate insolvency should, as a rule, proceed on a project-specific basis rather than against the entire corporate debtor, except in exceptional circumstances.

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Stakeholder Submissions and Views 3.50. While there was broad support for a project-centric approach to insolvency in real estate, stakeholders also highlighted important structural and legal complexities that warrant careful calibration. Support for Project-Wise Admission 3.51. A substantial majority of stakeholders supported the principle that insolvency proceedings in real estate should, as far as possible, be confined to the defaulting project rather than the CD as a whole. Key submissions included the following:

3.51.1. Homebuyer associations strongly advocated project-wise admission, emphasising that entity-level CIRP unfairly subjects thousands of homebuyers of solvent or completed projects to moratoriums, stalled approvals, and prolonged uncertainty, despite no default in their respective projects. They submitted that project-wise admission is essential to protect third- party rights and to ensure that viable projects are not sacrificed to unrelated financial distress.

3.51.2. RERA authorities highlighted that the real estate regulatory framework is fundamentally project centric.

to ensure that viable projects are not sacrificed to unrelated financial distress.

3.51.2. RERA authorities highlighted that the real estate regulatory framework is fundamentally project centric. Each project is registered, monitored, and regulated independently under RERA. From a regulatory standpoint, extending insolvency to non- defaulting projects undermines both regulatory discipline and consumer protection.

3.51.3. Financial institutions and alternative investment funds submitted that project-wise admission aligns more closely with commercial reality, as lending and security structures are typically project-specific. Ring-fencing projects at the admission stage improves valuation clarity, reduces contingent liabilities, and enhances the attractiveness of distressed projects to potential resolution applicants.

3.51.4. IPs and RAs noted that project-wise admission simplifies claims management, cost- to-complete assessment, cash-flow tracking, and construction monitoring. They submitted that entity-level CIRP creates avoidable complexity by pooling unrelated liabilities and assets, thereby deterring serious bidders and delaying resolution. Cautionary views and identified challenges 3.52. Alongside support for project-wise admission, certain stakeholders raised important concerns regarding its feasibility within the existing corporate law framework:

3.52.1. Corporate law and accounting challenges were highlighted by legal experts and former members of the AA.

nt concerns regarding its feasibility within the existing corporate law framework:

3.52.1. Corporate law and accounting challenges were highlighted by legal experts and former members of the AA. It was pointed out that a CD is constituted as a single legal entity, with unified books of accounts, statutory filings, and contractual obligations. Carving out one project for insolvency admission raises complex questions relating to:

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a. segregation of assets and liabilities without formal corporate restructuring; b. treatment of common expenses, inter-project advances, and shared borrowings; c. consistency with accounting standards and audit requirements; and d. potential implications for shareholders and other creditors not linked to the defaulting project. 3.52.2. Risk of fragmentation and abuse was also flagged. Some stakeholders cautioned that indiscriminate project-wise admission could incentivise strategic behaviour, where promoters seek to isolate distressed projects while retaining control over profitable ones, notwithstanding fund commingling or cross-collateralisation.

3.52.3. Group and SPV structures prevalent in real estate were noted as an additional complexity. In many cases, land ownership, development rights, or licenses are held by related entities or SPVs. Stakeholders submitted that a rigid project-wise admission rule, without mechanisms for consolidation or coordinated proceedings, could impede resolution rather than facilitate it. Emerging Consensus 3.53.

rs submitted that a rigid project-wise admission rule, without mechanisms for consolidation or coordinated proceedings, could impede resolution rather than facilitate it. Emerging Consensus 3.53. Despite these concerns, stakeholders broadly agreed that the existing entity-centric admission framework produces disproportionate harm in the real estate sector and that project- wise admission, if accompanied by clear eligibility criteria, safeguards, and exceptions, would better serve the objectives of the Code. There was consensus that the present reliance on post- admission project-wise resolution under the CIRP Regulations is not a complete solution and does not adequately address the systemic issues arising at the admission stage itself.
Analysis and Considerations of the Committee 3.54. The Committee carefully examined the competing considerations emerging from stakeholder submissions. Economic and Sectoral Reality of Real Estate 3.55. The Committee notes that real estate development is fundamentally project-centric, not entity-centric. Each project typically has: a. distinct land parcels and development rights; b. separate approvals and regulatory compliance; c. project-specific financing, escrow arrangements, and cash flows; and

ch project typically has: a. distinct land parcels and development rights; b. separate approvals and regulatory compliance; c. project-specific financing, escrow arrangements, and cash flows; and

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d. a clearly identifiable class of homebuyers whose rights are confined to that project. 3.56. From an economic and functional perspective, the project—not the corporate entity— is the true unit of value creation and resolution. Subjecting multiple independent projects to a single insolvency process therefore obscures this reality and may lead to sub-optimal outcomes. Limitations of the Present Framework 3.57. While the CIRP Regulations permit project-wise resolution post-admission, the Committee finds that this may not lead to the most efficient outcomes for real estate cases. Entity-level admission triggers moratoriums, freezes approvals, and creates uncertainty for all projects, including those that are viable or substantially complete. Homebuyers of such projects suffer collateral damage even before any project-wise segregation is judicially recognised.

3.58. The Committee also observes that reliance on case-by-case judicial innovation has resulted in inconsistent outcomes across jurisdictions, undermining predictability and stakeholder confidence. Addressing Corporate Law and Accounting Concerns 3.59. The Committee acknowledges the legitimacy of concerns relating to corporate personality, accounting standards, and asset-liability segregation.

ddressing Corporate Law and Accounting Concerns 3.59. The Committee acknowledges the legitimacy of concerns relating to corporate personality, accounting standards, and asset-liability segregation. However, it is of the considered view that these challenges are not insurmountable and should not justify continuation of the present framework as it is.

3.60. In the Committee’s assessment: a. Project-wise admission need not imply fragmentation of the corporate entity for all purposes, but rather a limited and functional segmentation for insolvency resolution. b. Objective criteria—such as separate land, approvals, escrow accounts, and identifiable homebuyer and creditor pools—can be prescribed to determine eligibility for project- wise admission. c. Exceptional cases involving pervasive fund commingling, cross-collateralisation, or fraud may justifiably warrant entity-level admission, with reasons recorded by the AA. Alignment with judicial direction and public interest 3.61. The Committee places significant weight on the consistent judicial emphasis on project completion and protection of homebuyers as the central objectives of real estate insolvency. The directions of the Hon’ble Supreme Court in Mansi Brar Fernandes and earlier cases reflect an expectation that insolvency mechanisms in real estate must evolve beyond rigid corporate formalism and respond to sector-specific realities.

rt in Mansi Brar Fernandes and earlier cases reflect an expectation that insolvency mechanisms in real estate must evolve beyond rigid corporate formalism and respond to sector-specific realities.

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3.62. In the Committee’s view, project-wise admission is not a departure from the Code’s objectives but a necessary adaptation to ensure that time-bound resolution and value maximisation are meaningfully achieved in the real estate sector. 3.63. Recommendation Nos. 18, 19, 20, 21 and 22

3.63.1. The Committee is of the considered view that CIRP in the real estate sector should ordinarily be admitted on a project-wise basis, with each real estate project treated as an independent unit for the purposes of insolvency admission and resolution.

3.63.2. Admission of CIRP may be confined to the defaulting project, and solvent, completed or unrelated projects of the same developer may not be included.

3.63.3. Entity-level CIRP encompassing multiple projects may be permitted only in exceptional circumstances, including: a. substantial inter-linkages or commingling of funds across projects; b. cross-collateralisation of assets or guarantees; or c. demonstrable fraud or mismanagement affecting multiple projects. 3.63.4. Where entity-level admission is ordered, the AA may record specific reasons in writing justifying deviation from the project-wise approach.

3.63.5. Given the peculiar challenges in the real estate sector, as noted by the Committee above, the MCA may consider enabling project-wise admission of CIRP for real estate cases.

ise approach.

3.63.5. Given the peculiar challenges in the real estate sector, as noted by the Committee above, the MCA may consider enabling project-wise admission of CIRP for real estate cases.
DFS and RERA may consider facilitating project-wise admission by laying down project specific frameworks that facilitate project-wise lending, maintenance of CDs accounts project-wise, and project-wise monitoring.
D2. Exclusion of Completed or Occupied Projects from CIRP Issue Description 3.64. A critical and recurring concern identified by the Committee is the initiation or continuation of insolvency proceedings in respect of real estate projects that are already completed, substantially completed, or occupied by allottees. Under the existing entity-level admission framework, such projects are often subsumed within the CIRP of the developer, even where they are not commercially distressed and have no direct nexus with the defaulting insolvent project.

ission framework, such projects are often subsumed within the CIRP of the developer, even where they are not commercially distressed and have no direct nexus with the defaulting insolvent project.

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3.65. This problem is intrinsically linked to the absence of project-wise admission of CIRP. When the CD as a whole is admitted into insolvency, all projects—irrespective of their stage of completion or financial health—become subject to moratorium and insolvency administration. As a result, even projects where possession has been handed over, and residents are living in the premises, are exposed to legal and operational disruption.

3.66. Stakeholders highlighted that completed or occupied projects do not present a resolution or revival problem that insolvency law is designed to address. The issues that may subsist in such projects - such as pending occupancy or completion certificates, execution of conveyance deeds, or compliance with development conditions—are regulatory and administrative in nature and are more appropriately addressed under RERA or by local authorities rather than through CIRP.

3.67. Accordingly, the Committee considers exclusion of completed or occupied projects not as an isolated reform, but as a necessary and integral consequence of adopting project-wise admission of CIRP in real estate cases. Existing Legal and Regulatory Position 3.68. The Code does not expressly distinguish between completed and ongoing real estate projects at the stage of admission.

ion of CIRP in real estate cases. Existing Legal and Regulatory Position 3.68. The Code does not expressly distinguish between completed and ongoing real estate projects at the stage of admission. Insolvency is initiated against the CD as a legal entity, and the moratorium under Section 14 applies across all its assets and operations.

3.69. However, the underlying scheme of the Code, read with the CIRP Regulations and judicial interpretation, supports a purposive distinction between projects that are operationally and financially distressed and those that are not. Key aspects include:

3.69.1. Objective of CIRP: The Code is intended to resolve insolvency and financial distress through reorganisation or revival. A completed or occupied project that is not generating operational distress does not ordinarily require insolvency intervention.

3.69.2. Project-wise resolution under CIRP Regulations: Regulations 36A, 37 and 38 permit resolution plans to be structured in respect of specific assets or business units of the CD. Judicial practice has extended this flexibility to real estate projects, implicitly recognising that not all projects of a developer are similarly situated.

3.69.3. Impact of moratorium: Once a completed project is drawn into CIRP, the moratorium often freezes maintenance arrangements, the functioning of resident welfare associations, and execution of conveyance deeds, causing significant hardship to residents who are already in possession. Judicial Guidance

nance arrangements, the functioning of resident welfare associations, and execution of conveyance deeds, causing significant hardship to residents who are already in possession. Judicial Guidance

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3.70. Judicial fora have consistently cautioned against indiscriminate application of insolvency proceedings to real estate projects, especially where such application unsettles completed developments and harms resident communities.

3.71. The Hon’ble Supreme Court in Mansi Brar Fernandes v. Shubha Sharma & Ors. emphasised that real estate insolvency should ordinarily proceed on a project-specific basis and that solvent or completed projects should not be dragged into insolvency due to unrelated defaults. The Court underlined that the IBC is not a mechanism for regulatory clean-up or administrative regularisation.

3.72. Earlier decisions of Chitra Sharma v. Union of India and Jaypee Kensington Boulevard Apartments Welfare Association V. NBCC India Ltd., the Hon’ble Supreme Court recognised that substantially completed or near-completion real estate projects present a different situation from stalled projects. 3.73. During consultations and Committee meetings, stakeholders uniformly linked the hardship caused to residents directly to the entity-level admission of CIRP:

3.73.1. Homebuyer associations highlighted severe disruption caused when occupied projects are included in CIRP, including stoppage of essential services, inability to form or operate RWAs, and prolonged delays in execution of conveyance deeds.

3.73.2.

on caused when occupied projects are included in CIRP, including stoppage of essential services, inability to form or operate RWAs, and prolonged delays in execution of conveyance deeds.

3.73.2. FCs acknowledged that completed projects rarely contribute to resolution value and often become sources of avoidable litigation and administrative burden.

3.73.3. RPs submitted that managing occupied projects within CIRP significantly increases complexity without advancing resolution outcomes, diverting attention and resources from genuinely distressed projects.

3.74. The Committee deliberated that insolvency adjudication is ill-suited to resolve post- completion regulatory issues, which lie squarely within the domain of RERA authorities, municipal bodies and development authorities. Inclusion of such projects in CIRP was seen as an unintended consequence of the entity-level admission framework rather than a deliberate policy choice. Analysis and Rationale of the Committee 3.75. The Committee considers exclusion of completed or occupied projects to be a necessary safeguard to operationalise project-wise admission of CIRP in real estate cases.

3.76. In the Committee’s assessment:

ttee considers exclusion of completed or occupied projects to be a necessary safeguard to operationalise project-wise admission of CIRP in real estate cases.

3.76. In the Committee’s assessment:

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3.76.1. Functional irrelevance to insolvency: Completed or occupied projects do not require revival, restructuring or business reorganisation—the core concerns of CIRP.

3.76.2. Disproportionate harm: Inclusion of such projects in CIRP causes disproportionate harm to homebuyers who have already taken possession and are not beneficiaries of insolvency resolution.

3.76.3. Regulatory misalignment: Issues such as OC/CC, layout regularisation, and conveyance are regulatory in nature and cannot be effectively resolved through insolvency proceedings. 3.76.4. Logical corollary of project-wise admission: If insolvency is to be admitted project- wise, it necessarily follows that projects which are completed or substantially completed and occupied should ordinarily fall outside the insolvency net.

3.77. At the same time, the Committee recognises that exceptional circumstances—such as demonstrable fraud, pervasive commingling of funds, or unresolved title disputes directly affecting residents—may justify limited insolvency intervention. Such cases, however, must remain the exception and not the rule. 3.78. Recommendation Nos. 23, 24, 25, 26 and 27

3.78.1. Ordinary exclusion: Completed or substantially completed and occupied real estate projects should ordinarily be excluded from initiation or continuation of CIRP.

3.78.2.

25, 26 and 27

3.78.1. Ordinary exclusion: Completed or substantially completed and occupied real estate projects should ordinarily be excluded from initiation or continuation of CIRP.

3.78.2. Admission-stage filtering: At the stage of admission, the AA may examine whether the alleged default pertains to a project that is completed or substantially completed and, if so, decline admission or confine CIRP to the defaulting project alone.

3.78.3. Mandatory carve-outs: Where a CD is admitted into CIRP in respect of one or more projects, the AA may expressly carve out completed or occupied projects, permitting: a. continuation of maintenance and essential services, b. formation and functioning of RWAs, c. execution of conveyance deeds and completion of regulatory compliances. 3.78.4. Regulatory resolution route: Outstanding issues in completed or occupied projects should be addressed through RERA authorities, municipal bodies or development authorities, and not through insolvency proceedings.

ution route: Outstanding issues in completed or occupied projects should be addressed through RERA authorities, municipal bodies or development authorities, and not through insolvency proceedings.

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3.78.5. Exceptional inclusion with reasons: Inclusion of completed projects in CIRP should be permitted only in exceptional circumstances, with detailed reasons recorded in writing demonstrating necessity, proportionality and absence of viable regulatory alternatives. D3. Ring-Fencing of assets and cash flows in Real Estate Insolvency Issue Description 3.79. One of the most persistent causes of distress in the real estate sector is the diversion and commingling of funds across multiple projects undertaken by the same developer. Homebuyer advances and lender funds raised for a specific project are often utilised to finance other projects, service unrelated debts, or meet general corporate expenses. This practice leads to stalled construction, erosion of stakeholder confidence, and cascading defaults.

3.80. In insolvency proceedings, the absence of clear ring-fencing further complicates resolution. Where assets, receivables, and cash flows of multiple projects are intermingled, resolution professionals face difficulty in: • identifying project-specific assets and liabilities; • verifying claims accurately; and • structuring viable, project-centric resolution plans. 3.81.

lution professionals face difficulty in: • identifying project-specific assets and liabilities; • verifying claims accurately; and • structuring viable, project-centric resolution plans. 3.81. Mandatory project-wise ring-fencing of assets and cash flows is therefore essential to ensure transparency, accountability, and effective resolution in real estate insolvency. RERA Framework 3.82. The Real Estate (Regulation and Development) Act, 2016, already incorporates the principle of ring-fencing at the project level. Section 4(2)(l)(D) of RERA mandates that: • 70% of the amounts realised from allottees must be deposited in a separate account, to be used only for land and construction costs of that specific project. • Withdrawals are permitted only in proportion to the percentage of completion and subject to certification by an engineer, architect, and chartered accountant. 3.83. This provision recognises that project-wise financial discipline is critical to protecting homebuyers and ensuring completion.

tification by an engineer, architect, and chartered accountant. 3.83. This provision recognises that project-wise financial discipline is critical to protecting homebuyers and ensuring completion.

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IBC and CIRP Regulations 3.84. The CIRP Regulations provide flexibility for project-specific resolution, particularly in real estate insolvency: a. Regulation 4D requires the IRP or RP, as the case may be, to operate a separate bank account for each real estate project. b. Regulation 35A (Preferential, Undervalued, Fraudulent and Extortionate Transactions) empowers RPs to examine diversion of funds and seek clawback. c. Regulations 37 and 38 permit resolution plans to provide for restructuring and segregation of assets and liabilities on a project basis. d. Regulation 36 (Information Memorandum) requires disclosure of assets, liabilities, cash flows, and receivables, enabling identification of project-wise financials where records are maintained. Practical Gaps 3.85. Committee deliberations noted that: • escrow discipline under RERA often weakens post-default; • CIRP bank accounts are frequently consolidated at the CD level, and • Lack of real-time cash-flow tracking enables continued leakage of project funds even during insolvency. 3.86. During this Committee consultations:

3.86.1. Homebuyer associations strongly advocated mandatory escrow and project-wise bank accounts during CIRP to prevent further diversion.

3.86.2. FCs supported cash-flow segregation to enable accurate assessment of project viability and funding needs.

escrow and project-wise bank accounts during CIRP to prevent further diversion.

3.86.2. FCs supported cash-flow segregation to enable accurate assessment of project viability and funding needs.

3.86.3. RPs noted that lack of ring-fencing increases litigation, delays resolution, and discourages resolution applicants.

3.86.4. RAs indicated that clear project-level financial viability is a prerequisite for bidding.

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3.87. The Committee observed near-unanimous support for strengthening ring-fencing norms both prior to and during the CIRP. Analysis and Rationale 3.88. The Committee’s analysis highlights the following:

3.88.1. Foundation for project-wise CIRP: Project-specific resolution is ineffective unless assets and cash flows are clearly segregated.

3.88.2. Protection of homebuyer funds: Ring-fencing ensures that homebuyer advances are utilised only for completion of the project they invested in. 3.88.3. Transparency and audit trail: Separate bank accounts and cash-flow tracking enable real-time monitoring, audit, and reduce disputes on fund usage.

3.88.4. Identification of fraudulent transactions: Clear segregation assists in identifying and clawing back preferential or fraudulent transactions.

3.88.5. Improved market confidence: Predictable and transparent financial structures enhance participation by the lenders and the resolution applicants. 3.89. Recommendation Nos. 28, 29, 30, 31 and 32

3.89.1. Mandatory project-wise ring-fencing be institutionalised for real estate insolvency, including: a.

enders and the resolution applicants. 3.89. Recommendation Nos. 28, 29, 30, 31 and 32

3.89.1. Mandatory project-wise ring-fencing be institutionalised for real estate insolvency, including: a. Project-wise lending by creditors and its monitoring b. separate escrow accounts for each project; c. separate bank accounts for receipts and expenditures relating to a project; and d. project-wise accounting of receivables, payables, and cash flows. 3.89.2. During CIRP, the RPs shall operate and maintain project-wise accounts, with withdrawals linked to construction milestones and approved budgets.

3.89.3. Cash-flow tracking and periodic disclosure by the RP to the CoC, homebuyers (through the ARs), and the AA be mandated.

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3.89.4. Diversion of project funds during the CIRP is treated as a serious contravention, attracting avoidance actions and personal accountability.

3.89.5. IBBI should harmonise RERA escrow principles with insolvency processes, ensuring continuity of financial discipline, post-admission of a real estate project. E. Possession, Refunds and Allottee Choice E1. Possession of Substantially Completed Units during CIRP Issue Description 3.90. A recurring challenge in real estate insolvency is the prolonged deprivation of possession to homebuyers in projects that are substantially complete but technically stalled due to pending statutory approvals, such as the Occupancy Certificate (OC) or Completion Certificate (CC).

ssession to homebuyers in projects that are substantially complete but technically stalled due to pending statutory approvals, such as the Occupancy Certificate (OC) or Completion Certificate (CC). Once a real estate project enters CIRP, possession is often frozen entirely, even where units are habitable and construction is largely complete.

3.91. For many homebuyers, especially those who have already paid a substantial portion of the consideration, early possession with minor pending works is preferable to indefinite waiting for completion of all formalities under insolvency proceedings. The rigid insistence on OC/CC before possession during CIRP frequently results in increased hardship to homebuyers, accumulation of maintenance and interest burdens, deterioration of completed structures, and avoidable delays in value realisation.

3.92. The issue, therefore, concerns whether, and under what safeguards, possession of substantially completed units may be permitted during the CIRP, without undermining safety, regulatory oversight, or the interests of other stakeholders. Status under RERA 3.93. Under RERA, possession is ordinarily linked to the issuance of OC/CC by the competent authority. RERA emphasises consumer protection, safety standards, and compliance with building norms. However, RERA also recognises practical realities and empowers authorities to permit phased completion, regularise deviations in certain circumstances, and oversee project completion through regulatory supervision.

3.94.

ses practical realities and empowers authorities to permit phased completion, regularise deviations in certain circumstances, and oversee project completion through regulatory supervision.

3.94. Notably, RERA does not expressly prohibit limited or conditional possession where construction is substantially complete, subject to safeguards and undertakings.

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Status under IBC and the CIRP Regulations 3.95. The Code does not expressly address possession of real estate units during the CIRP. Traditionally, the moratorium under Section 14 of the Code meant that direct enforcement actions against the CD’s assets were restricted once the CIRP commenced. This created uncertainty as to whether possession or transfer of completed units could be undertaken during the insolvency process, even where homebuyers had fully complied with their contractual obligations.

3.96. To address this longstanding issue and strike a balance between asset preservation and consumer protection, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 introduced Regulation 4E into the CIRP Regulations, 2016.

3.97.

the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 introduced Regulation 4E into the CIRP Regulations, 2016.

3.97. Regulation 4E empowers the Resolution Professional (RP), after obtaining the approval of the Committee of Creditors (CoC) with not less than 66 % of the total votes, to hand over possession of plots, apartments, buildings or any instruments agreed to be transferred under a real estate project to allottees who have fulfilled their contractual obligations, and to facilitate registration where requested by the allottee.

3.98. Key elements of this provision include: • The RP must obtain CoC approval (at least 66 % voting share) before possession is handed over.
• Handover is permitted when the homebuyer has performed all obligations under the agreement.
• The RP can assist in facilitating registration of the property in favour of the allottee, even during CIRP.
• The regulation clarifies that such handover, when conducted in accordance with regulatory requirements and the CoC approval, does not violate the moratorium under Section 14 of the Code.
3.99. Regulation 4E represents a significant shift in the regulatory position, explicitly permitting early possession subject to safeguards and creditor consent. Regulation 4E now provides the first explicit regulatory mechanism enabling homebuyers to secure possession during the CIRP without waiting for resolution plan approval or project completion.

3.100.

lation 4E now provides the first explicit regulatory mechanism enabling homebuyers to secure possession during the CIRP without waiting for resolution plan approval or project completion.

3.100. Further, the Hon’ble Supreme Court in the matter of Mansi Brar Fernandes vs. Shubha Sharma and Anr. had observed that possession of a dwelling unit remains the sine qua non of a genuine homebuyer’s intent. It directed that “… IBBI shall also devise a mechanism to enable handover of possession to willing allottees where substantial units in a project are complete.”

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Practical Status during the CIRP 3.101. In practice, the RPs tend to adopt a conservative approach, refraining from handing over possession due to fear of regulatory non-compliance, uncertainty regarding liabilities, absence of express statutory guidance, and risk of personal accountability. This regulatory vacuum has resulted in inconsistent outcomes across projects and jurisdictions. Judicial Guidance 3.102. The Hon’ble Supreme Court in the matter of Elegna Co-operative Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Company Ltd. & Anr. has directed that where the Committee of Creditors, upon due consideration, finds it not viable to approve handover of possession in terms of Regulation 4E of the CIRP Regulations, it shall mandatorily record cogent and specific reasons in writing for such decision. 3.103. During stakeholder consultations and Committee meetings:

3.103.1.

ulation 4E of the CIRP Regulations, it shall mandatorily record cogent and specific reasons in writing for such decision. 3.103. During stakeholder consultations and Committee meetings:

3.103.1. Homebuyer associations strongly supported early possession, stating that many allottees are willing to undertake minor finishing work themselves.

3.103.2. RPs indicated that early possession reduces maintenance costs, vandalism risks, and litigation pressure.

3.103.3. Land and development authorities emphasised the need for safety, fire norms, and structural compliance.

3.103.4. RERA authorities supported a coordinated approach involving certification and regulatory supervision.

3.104. The Committee noted broad agreement that possession should not be mechanically tied to completion of the entire insolvency process. Analysis and Rationale 3.105. The Committee’s analysis is based on the following considerations: (i) Homebuyer Welfare: Housing is a basic necessity, and prolonged denial of possession causes severe social and financial distress. (ii) Value Preservation: Occupied and maintained units retain value better than abandoned structures.

ic necessity, and prolonged denial of possession causes severe social and financial distress. (ii) Value Preservation: Occupied and maintained units retain value better than abandoned structures.

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(iii) Reduction of Litigation: Early possession addresses the primary grievance of allottees, significantly reducing disputes and court interventions. (iv) Alignment with Completion-First Philosophy: Allowing possession is consistent with the objective of prioritising project completion over liquidation. 3.106. The Committee notes that Regulation 4E of the CIRP Regulations, 2016 (as amended) is a progressive step, as it expressly enables the RP to hand over possession of plots, apartments or buildings to allottees during CIRP, subject to approval of the CoC by a vote of not less than sixty-six per cent.

3.107. However, based on stakeholder consultations and deliberations reflected in the Committee’s meetings, the Committee is of the view that the requirement of prior CoC approval may, in certain circumstances, unnecessarily delay possession and defeat the objective of timely relief to homebuyers, particularly where: • the unit is substantially complete; • the allottee has discharged all payment and contractual obligations; • handing over possession does not adversely affect the value of the remaining project or the interests of other stakeholders; and • possession would reduce maintenance costs and liabilities of the CD during CIRP. 3.108.

does not adversely affect the value of the remaining project or the interests of other stakeholders; and • possession would reduce maintenance costs and liabilities of the CD during CIRP. 3.108. The Committee is of the view that handover of possession in such cases should be treated as an act in furtherance of value preservation and consumer protection, and not as a commercial or financial decision requiring creditor approval. Further, in view of the order of the Hon’ble Supreme Court in the Elegna Co-operative Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Company Ltd. & Anr., the Committee was of the view that instead of the CoC, the RP may be required to record cogent and specific reasons for not giving possession to a willing allottee who has met all obligations.
3.109. Recommendation Nos. 33 and 34

3.109.1. The Committee recommends that, provided that where a unit in a real estate project is complete on or before the insolvency commencement date, the regulatory framework may be further liberalised to permit the RP to hand over possession of substantially completed units to eligible allottees, without requiring prior approval of the CoC.

, the regulatory framework may be further liberalised to permit the RP to hand over possession of substantially completed units to eligible allottees, without requiring prior approval of the CoC.

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3.109.2. The Committee recommends that where the RP, upon due consideration, finds it not viable to approve handover of possession, he shall mandatorily record cogent and specific reasons in writing for such decision. E2. Classification of Homebuyers Based on Relief Sought Issue Description 3.110. Real estate insolvency proceedings involve a diverse and heterogeneous group of homebuyers whose expectations and interests may not be uniform. While all allottees are classified as FCs under the Code, they often seek distinct forms of relief, such as: • possession of the dwelling unit, • execution of conveyance/registry, or • refund of amounts paid, with or without interest. 3.111. Treating all homebuyers as a single undifferentiated class for purposes of resolution planning, voting and implementation has led to conflicts of interest, impractical resolution structures, and post-approval litigation. The issue is whether the insolvency framework should permit and recognise classification of homebuyers based on the nature of relief sought, so as to enable transparent, feasible and equitable resolution outcomes. Status under the IBC and the CIRP Regulations 3.112. Under the IBC, homebuyers are treated as a class of FCs and are represented through an AR in the CoC.

asible and equitable resolution outcomes. Status under the IBC and the CIRP Regulations 3.112. Under the IBC, homebuyers are treated as a class of FCs and are represented through an AR in the CoC. The Code and the CIRP Regulations do not currently mandate or prohibit sub-classification of homebuyers based on relief sought.

3.113. Resolution plans may provide differential treatment to different classes of creditors, provided such treatment complies with Section 30(2) and is not discriminatory. In practice, resolution plans have occasionally adopted informal distinctions between continuing allottees (seeking possession) and exiting allottees (seeking refund). 3.114. During the stakeholder consultations by this Committee, the following views were expressed:

3.114.1. Homebuyer representatives emphasised that forcing refund-seekers and possession-seekers into a single voting block leads to mistrust, disputes and litigation. Failure to classify homebuyers based on relief sought results in refund-seeking allottees voting against

d possession-seekers into a single voting block leads to mistrust, disputes and litigation. Failure to classify homebuyers based on relief sought results in refund-seeking allottees voting against

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completion-oriented plans; possession-seeking allottees opposing refund-heavy plans that undermine project viability; delays in execution of conveyance and possession due to unresolved objections from minority segments.

3.114.2. RAs highlighted that the absence of upfront classification complicates financial modelling, escrow planning and sequencing of construction.

3.114.3. RPs noted that classification based on relief sought would significantly reduce disputes during claim verification and plan implementation.

3.115. The Committee noted broad support for a structured and transparent classification mechanism, provided it does not fragment the CoC or undermine collective resolution. However, the Committee was of the view that all homebuyers as FCs form a single class and must exercise voting rights collectively through an AR. Introducing sub-classifications within this class in the CoC would be inconsistent with the statutory framework, undermine collective decision-making, and risk fragmentation in real estate insolvency processes. Differences in individual preferences should instead be addressed, where feasible, within the terms of the resolution plan and its implementation, without altering the uniform voting structure prescribed under the Code. 3.116. Recommendation Nos. 35, 36, 37 and 38

3.116.1.

e, within the terms of the resolution plan and its implementation, without altering the uniform voting structure prescribed under the Code. 3.116. Recommendation Nos. 35, 36, 37 and 38

3.116.1. The Committee does not recommend any distinction among homebuyers for voting purposes in the CoC, based on whether they seek a refund or possession.

3.116.2. In real estate CIRPs, RPs may be mandated to classify homebuyers into sub- categories based on the nature of relief sought, such as: a. allottees seeking possession of units, b. allottees seeking execution of conveyance/ registry, and c. allottees seeking refund of amounts paid. 3.116.3. Homebuyers should be required to exercise the choice between possession or refund within a specified timeframe, to be prescribed by regulations or guidelines, failing which a default option may apply.

3.116.4. The IM should provide project-wise disclosures on whether the homebuyers have opted for possession, refund or others in their claim forms.

s, failing which a default option may apply.

3.116.4. The IM should provide project-wise disclosures on whether the homebuyers have opted for possession, refund or others in their claim forms.

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E3. Allottee Choice in resolution plan –Possession or Refund Issue Description 3.117. A recurring challenge in real estate insolvency proceedings is the heterogeneity of homebuyer interests. While some allottees primarily seek possession of their homes, others— owing to prolonged delays, changed personal and financial circumstances, or loss of confidence in the developer—prefer refund of their investment with interest.

3.118. In the absence of a structured framework recognising these divergent preferences, resolution plans often adopt a uniform approach, leading to dissatisfaction among sections of allottees, increased litigation, and delays in resolution plan implementation.

3.119. The issue, therefore, is whether and how the insolvency framework should explicitly recognise and accommodate allottee choice between refund and possession in the resolution plans. 3.120. The Code recognises homebuyers as FCs but does not differentiate among them based on the nature of relief sought. In practice, resolution applicants often structure plans that prioritise project completion and possession for continuing allottees and provide refund options to dissenting or exiting allottees, subject to haircut and timelines. However, the absence of regulatory clarity has resulted in inconsistent approach across cases. 3.121.

d provide refund options to dissenting or exiting allottees, subject to haircut and timelines. However, the absence of regulatory clarity has resulted in inconsistent approach across cases. 3.121. Stakeholder consultations and Committee deliberations highlighted several challenges: • Forced continuation in projects by unwilling allottees leads to resistance, non- cooperation and litigation. • Blanket refund mechanisms strain project viability and cash flows. • Lack of upfront choice complicates claim estimation and resolution planning. 3.122. During consultations, the following viewpoints emerged:

3.122.1. Homebuyer associations emphasised the need for autonomy and choice, noting that prolonged insolvency without possession causes severe financial and emotional hardship.

3.122.2. Resolution applicants and lenders supported structured choice mechanisms, provided such choices are exercised within defined timelines and reflected transparently in the resolution plan.

3.122.2. Resolution applicants and lenders supported structured choice mechanisms, provided such choices are exercised within defined timelines and reflected transparently in the resolution plan.

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3.122.3. Resolution Professionals highlighted that early classification of allottees based on relief sought would materially improve feasibility assessment and plan implementation.

3.123. The Committee noted a broad consensus that recognising allottee choice upfront would reduce post-approval disputes, litigation and enforcement challenges. 3.124. Recommendation Nos. 39, 40 and 41

3.124.1. Resolution plans in real estate CIRPs should be required to provide clear options to homebuyers, enabling them to elect between continuation in the project for possession of the unit, or exit from the project through refund of the amount paid, with interest as may be determined in the resolution plan.

3.124.2. Resolution applicants may structure differential timelines, consideration, or modalities for refund-seeking and possession-seeking allottees, provided the treatment is transparent, rational, and non-discriminatory.

3.124.3. The AR and the RP should ensure proper dissemination of plan details to allottees; facilitation of informed choice; and accurate aggregation of claims based on the relief elected. F. Admission Thresholds and Initiation of CIRP F1. Threshold for Initiating Real Estate CIRP Issue Description 3.125.

rmed choice; and accurate aggregation of claims based on the relief elected. F. Admission Thresholds and Initiation of CIRP F1. Threshold for Initiating Real Estate CIRP Issue Description 3.125. During this Committee’s consultations, several stakeholders suggested that the minimum default requirement for triggering insolvency proceedings in the real estate sector should be revisited. Real estate projects are capital-intensive, long-gestation ventures involving numerous interdependent stakeholders, including large bodies of homebuyers, lenders, contractors and public authorities. Initiation of CIRP has immediate and far-reaching consequences: management displacement, moratorium, market signalling effects, funding disruption and reputational impact on the project.

3.126. Concerns were expressed that the existing threshold of ₹1 crore, when applied to this sector, may allow insolvency to be triggered in situation