Homebuyers Cannot Invoke Insolvency Proceedings To Execute RERA Decrees: NCLAT

In a recent order issued by the National Company Law Appellate Tribunal ("NCLAT") in the case of Sushil Ansal Vs. Ashok Tripathi¹, the NCLAT has held that a decree-holder cannot be treated as a financial creditor for the purpose of triggering insolvency proceedings against a company. The NCLAT while doing so, set aside the order dated March 17, 2020 of the National Company Law Tribunal, New Delhi ("NCLT") whereby the NCLT had earlier admitted an application filed against Ansal Properties and Infrastructure Limited ("APIL"). The NCLT had in the APIL case based on a recovery certificate issued by the Uttar Pradesh Real Estate Regulatory Authority ("UP RERA") to two (2) homebuyers allowed the appointment of an interim resolution professional and had declared moratorium on the APIL's assets. The NCLAT has now set aside the orders issued by the NCLT and held that a decree granted by RERA to homebuyers cannot be the basis for initiating insolvency.