Homebuyer Insolvency Threshold Must Be Based on Actual Bookings, Not Proposed Units: NCLT Kolkata

The Kolkata Bench of the National Company Law Tribunal (NCLT) on 9 October held that the threshold for admitting a homebuyer's insolvency petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), must be determined on the basis of actual bookings as they stood on the date of filing, and not proposed units. Also, that post-filing changes could not affect the assessment of the statutory threshold.

A Bench of Judicial Member Bidisha Banerjee and Technical Member Rekha Kantilal Shah admitted Evanie Infrastructure Private Limited into the corporate insolvency resolution process (CIRP), holding that it had failed to establish the number of allottees on which it based its objection to the petition's maintainability. It observed:

“we must evaluate the Applicants' numbers strictly as they stood on the date this petition was presented. Any subsequent cancellations, withdrawals, additions or post-filing changes cannot defeat the Applicants' right to proceed, nor can they affect this Tribunal's jurisdiction to decide the matter on its merits.”

Evanie Eco Nest Home Buyers Association, comprising 59 homebuyers, approached the NCLT alleging that Evanie Infrastructure had failed to commence construction despite receiving payments from the homebuyers.

The developer opposed the petition, contending that the project had 966 allottees and that the 59 applicants did not meet the minimum threshold of 10% of allottees prescribed under Section 7 of the IBC.

The Tribunal relied on the Supreme Court's ruling in Manish Kumar v. Union of India, (2021) ibclaw.in 16 SC, which held that homebuyers must satisfy the statutory threshold as on the date of filing the insolvency application.

Applying this principle, it held that the threshold calculation must rest on actual bookings or allotments rather than preliminary applications, promises or speculative figures.

The Bench examined the list of allottees submitted by the developer and found that several entries consisted of preliminary application forms without definitive allotment particulars. Some entries mentioned only the floor, without identifying the specific flat. It therefore declined to rely on the list as proof of the number of actual allottees.

Further, it observed that the post-filing expansion of the allottee list appeared designed to artificially inflate the total number of allottees and prevent the applicants from meeting the mandatory 10% threshold. It held that the Tribunal must disregard such additions because it must assess the petition's maintainability and the number of allottees as they stood on the filing date.

The Tribunal also examined the burden of proof under Sections 105 and 109 of the Bharatiya Sakshya Adhiniyam, 2023, in light of the Supreme Court's decision in R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple. It found that the developer had failed to establish the number of allottees on which it based its objection.

Accordingly, the NCLT admitted the insolvency petition, accepting the applicants' assertion that the project initially comprised 540 allottees.