For most families, a flat is the largest purchase of their lives. When the builder stops construction, misses possession dates by years and then goes into insolvency, the fear is that the money is gone. The Insolvency and Bankruptcy Code gives homebuyers a stronger position than many realise. Since 2018, allottees of real estate projects are treated as financial creditors, which means they sit on the committee of creditors that decides the builder's future, and they can start insolvency themselves if enough of them join.
This guide explains homebuyers' rights under the Code: when you can file, what happens when someone else has filed, how to submit your claim, how voting works through an authorised representative, what a resolution plan can offer, and how the NCLT route compares with RERA and consumer forums. It is written for buyers, not lawyers.
हिंदी में सारांश
2018 से घर खरीदारों को IBC के तहत वितà¥à¤¤à¥€à¤¯ लेनदार (financial creditor) माना जाता है। à¤à¤• ही पà¥à¤°à¥‹à¤œà¥‡à¤•à¥à¤Ÿ के कम से कम 100 खरीदार या 10%, जो à¤à¥€ कम हो, मिलकर NCLT में धारा 7 की याचिका दायर कर सकते हैं। अगर बिलà¥à¤¡à¤° पहले से दिवाला पà¥à¤°à¤•à¥à¤°à¤¿à¤¯à¤¾ में है, तो Form CA में दावा दायर करें। खरीदार à¤à¤• वरà¥à¤— के रूप में अधिकृत पà¥à¤°à¤¤à¤¿à¤¨à¤¿à¤§à¤¿ (authorised representative) के माधà¥à¤¯à¤® से CoC में वोट करते हैं।
Your rights in brief
You are a financial creditor
The Supreme Court upheld this in Pioneer Urban Land (2019). Your money is treated like a loan to the builder.
You can start insolvency
At least 100 allottees or 10% of the allottees of the same project, whichever is less, can file under Section 7.
You vote on the builder's future
Homebuyers vote as a class on the committee of creditors through an authorised representative.
File your claim in Form CA
If the builder is admitted into CIRP, submit your claim with your agreement and payment proof.
A plan can complete the project
A resolution applicant can take over and complete the project, with buyers receiving flats or refunds as the plan provides.
RERA remains an option
RERA and consumer forums remain available before insolvency, but once CIRP starts, the moratorium affects recovery against the builder.
Filing as a group: the threshold
After the Supreme Court upheld homebuyers' status as financial creditors in Pioneer Urban Land v Union of India (2019), concerns arose that a single buyer could push a large builder into insolvency. In 2020, Parliament added a proviso to Section 7(1): allottees must file jointly, numbering at least 100 or 10% of the total allottees of the same real estate project, whichever is less. The Supreme Court upheld this in Manish Kumar v Union of India (2021).
Two points matter in practice. The count is per project, so buyers from different projects of the same builder cannot be added together. And the default must still be at least Rs 1 crore, which is usually easy to meet when many buyers have paid substantial amounts. Buyers' associations should collect each member's agreement, payment receipts and authority before filing, and should confirm which company is the developer of their project, because large groups use separate companies.
What to do when your builder is in CIRP
Watch for the public announcement
The interim resolution professional publishes an announcement in newspapers and on the IBBI website with the deadline for claims.
File your claim in Form CA
Submit your claim with the allotment letter, buyer's agreement, payment receipts and bank statements. Many professionals accept claims online.
Choose or note the authorised representative
The announcement names insolvency professionals who can act as authorised representative for your class. Buyers indicate their choice in the claim form.
Give voting instructions
On each resolution, the authorised representative circulates the agenda and seeks your instructions. Vote in time, or your vote may not count.
Follow the plans
Read the summary of plans circulated, ask questions through the authorised representative, and decide how to vote.
Track implementation
After the NCLT approves a plan, a monitoring committee usually oversees construction and handover.
How homebuyers vote
Because a builder may have thousands of buyers, they vote as a class through an authorised representative, who must vote according to the instructions of the class. Before each vote, the representative circulates the agenda and the relevant information and seeks instructions within the time allowed. The class's vote is split according to how buyers voted, in proportion to their claims, rather than cast as a single block, following amendments made in 2020.
Homebuyers often hold a large share of the committee's voting power, sometimes a majority, which gives them real influence over who completes the project and on what terms. But they need to participate: low turnout means the decision is made by those who do vote. Buyers' associations play a useful role in explaining plans and coordinating responses.
NCLT, RERA or consumer forum?
| Point | NCLT (IBC) | RERA | Consumer commission |
|---|---|---|---|
| Who files | Group of allottees meeting the threshold | Individual buyer | Individual buyer |
| What you get | Collective process; plan to complete or pay | Refund with interest, or possession with delay compensation | Compensation for deficiency in service |
| Effect on builder | Board suspended; resolution professional takes charge | Builder stays in control | Builder stays in control |
| Best when | Builder cannot complete; buyers want a new developer | Builder has money; you want a refund or delay interest | You want compensation and the builder can pay |
| After CIRP starts | Claims in the CIRP | Recovery against the builder frozen by moratorium | Recovery against the builder frozen by moratorium |
What a resolution plan can offer buyers
A plan for a real estate company usually proposes completing the project, sometimes with a fresh timeline, additional funding from the resolution applicant, and arrangements with the land authority and lenders. Buyers may receive their flats as originally agreed, flats in a different tower or a smaller unit, or, for those who want out, a refund on terms that may be less than full. Some plans ask buyers to pay the unpaid part of the price, sometimes with an increase to fund construction.
The NCLAT has accepted a project-wise approach in some cases, such as Flat Buyers Association Winter Hills-77 v Umang Realtech (2020), limiting the insolvency to the stalled project so that other projects are not disturbed. And under the clean slate principle confirmed in Ghanashyam Mishra (2021), claims not included in the approved plan are extinguished, which is why filing your claim on time matters. For refunds under RERA, see refund with interest.
Buyers who filed together
Here's a made-up example. In a Greater Noida project of 900 flats, about 140 buyers had waited six years for possession. The buyers' association collected agreements, payment proof and signed authorisations from each, confirmed that the project was developed by a single company registered in Noida, and filed a Section 7 application before NCLT Allahabad. Because 140 was more than 90, which was 10% of the allottees, the threshold was met.
After admission, the buyers formed the largest class on the committee. A developer submitted a plan to complete the project within three years with fresh funding, and buyers voted in favour through their authorised representative. The plan was approved, and construction restarted.
A buyer who filed late
Here's a second made-up example. A buyer living abroad did not see the public announcement when her builder was admitted into CIRP. She learned of it months later, after the committee had begun considering plans. She filed her claim in Form CA with an explanation. The resolution professional accepted it, because the regulations allow late claims up to a point, and her claim was included in the information given to bidders. Had she waited until after the plan's approval, her claim could have been extinguished under the clean slate principle.
What a buyer should keep ready
- Allotment letter and builder-buyer agreement
- All payment receipts and bank statements
- Any home loan documents and tripartite agreement with the lender
- Correspondence with the builder about delay or possession
- Any RERA or consumer commission orders
- Contact details of other buyers in the project
- Login for the professional's claim portal, once the CIRP starts
Home loan buyers and tripartite agreements
Many buyers took home loans under tripartite agreements with the builder and the lender, and some builders promised to pay the pre-EMI interest until possession. When the builder enters insolvency and stops paying, the buyer remains liable to the bank. In the CIRP, the buyer's claim usually includes the amounts paid to the builder, and the treatment of amounts disbursed by the bank directly to the builder depends on the agreements. Buyers should keep paying their loans or negotiate with their bank, because the moratorium protects the builder, not the buyer. The resolution plan may address subvention arrangements, but buyers should not assume it will.
Key rulings for homebuyers
| Case | What it decided |
|---|---|
| Pioneer Urban Land v Union of India (2019) | Upheld treating allottees as financial creditors |
| Manish Kumar v Union of India (2021) | Upheld the 100-or-10% threshold, including for pending applications |
| Flat Buyers Association Winter Hills-77 v Umang Realtech (NCLAT, 2020) | Allowed a project-wise approach to a builder's insolvency |
| Jaypee Kensington v NBCC (2021) | Considered the treatment of homebuyers and dissenting creditors in a large real estate plan |
Buyers who want a refund, not a flat
Not every buyer in a stalled project wants the flat any more. Some have bought elsewhere; others need the money. In a CIRP, refund-seeking buyers are in the same class as those who want possession, and the plan may offer them different options. Plans often give refunds over a longer period or at a discount, while offering possession on better terms, because completing the project is what generates value. A buyer who wants a refund should state that clearly in the claim and in responses to the authorised representative, and read the plan's refund terms closely before voting.
Frequently Asked Questions
Are homebuyers financial creditors?
Yes. The Supreme Court upheld this in Pioneer Urban Land (2019).
How many buyers are needed to file?
At least 100 allottees or 10% of the allottees of the same project, whichever is less.
Can buyers from different projects join together?
No. The count is per project.
How do I file a claim if the builder is in CIRP?
In Form CA, with your agreement and payment proof, within the time in the public announcement.
Who votes for homebuyers?
An authorised representative, who must vote according to buyers' instructions, split in proportion to how buyers voted.
Can I still go to RERA?
Before CIRP, yes. Once CIRP starts, the moratorium freezes recovery against the builder, and you file a claim instead.
What if I miss the claim deadline?
File as soon as possible with an explanation. Late claims can be accepted up to a point, but claims not in the approved plan are extinguished.
Will I get my flat?
It depends on the plan. Many plans complete the project; some offer refunds or alternative units.
Homebuyer With a Stalled Project?
Send us your agreement and payment proof. We will explain your options under RERA and the IBC, and what to do now.
This page gives general information about the law as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. IBC rules and NCLT procedures change often, so outcomes depend on your own documents, dates and facts.
Have a question about your own case?
Send us the notice, the petition or the order. We will tell you where you stand, which bench hears it and the date the next step is due, in plain words.
