Commercial Property Allottees Can Be Financial Creditors Under IBC: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai Bench, has held that allottees of commercial property can qualify as financial creditors under the Insolvency and Bankruptcy Code, 2016 (IBC). The tribunal observed that the law does not restrict this status to buyers of residential units.

The bench of Judicial Member Vinay Goel and Technical Member Charanjeet Singh Gulati observed, “Upon a plain reading of Section 5(8)(f) of the Code, it is clear that when funds are obtained from an allottee in a real estate project, having the commercial effect of a borrowing, and disbursed against the consideration for the time value of money, it constitutes a financial debt.”

The tribunal further observed, “By Explanation (ii), “allottee” and “real estate project” have the meanings assigned to them in Sections 2(d) and 2(zn) of the Real Estate (Regulation and Development) Act, 2016 (“RERA”). Section 2(d) covers a person to whom a plot, apartment or building has been allotted, sold or otherwise transferred by the promoter, and Section 2(zn) covers development of a building or buildings, including a commercial building. The provision nowhere uses the expression “homebuyer” or restricts itself to residential units."

The case arose from a dispute over a commercial shop in the Wadhwa Regalia project. Harender Nihalani and Santosh Nihalani initially sought admission of their ₹5.27 crore claim as financial creditors in a class. During the hearing on September 22, 2026, however, they agreed to restrict their claim to ₹1.47 crore, the consideration recorded in the agreement for sale.

The resolution professional opposed the claim, arguing that the applicants had not established their entitlement to be treated as homebuyers under the IBC. The dispute also involved an earlier ₹3.80 crore amount arising from arrangements made by Suresh Wadhwa in his individual capacity.

The agreement for sale dated January 9, 2018, identified Wadhwa Buildcon LLP as Promoter No. 1 and recorded ₹1.47 crore as the consideration for Shop No. 11 on the ground floor of the Type A building in Wadhwa Regalia.

The resolution professional did not dispute that the ₹1.47 crore had been received in the corporate debtor's account. The tribunal held that the liability to the extent of this amount was attributable to the corporate debtor.

The tribunal examined whether the applicants were genuine allottees or speculative investors, relying on the Supreme Court's ruling in Mansi Brar Fernandes v. Shubha Sharma and Anr. The court considered factors such as the number of units purchased, assured returns and the possession timeline.

The applicants had bought only one shop, with no assured-return or buyback arrangement. Possession was due by December 31, 2021, over three years after the agreement. The tribunal found that they intended to take possession and were not speculative investors. It directed the resolution professional to admit their ₹1.47 crore claim as financial creditors in the class of allottees, subject to verification.