When a builder stops construction, misses possession dates by years and ignores buyers, homebuyers can do more than wait. Since 2018, homebuyers have been treated as financial creditors under the Insolvency and Bankruptcy Code. That means they can ask the NCLT to start an insolvency process against the builder company, and they get a vote in what happens to the project.
There is a catch. A homebuyer cannot file alone. The petition must be filed jointly by at least 100 allottees of the same project, or 10% of the total allottees of that project, whichever is less. And insolvency is a blunt tool: it can revive a stuck project, but it can also freeze it further. This page explains how the petition works, when it makes sense, and when a RERA complaint is the better route.
हिंदी में सारांश
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Is this your situation?
- Your builder has missed the promised possession date and construction has stopped
- The builder company has defaulted on refunds or possession for many buyers in the same project
- You are in touch with other buyers through an association or a WhatsApp group
- At least 100 buyers, or 10% of all buyers in your project, are willing to join
- The total amount at stake crosses Rs 1 crore (in a group, it almost always does)
- RERA orders against the builder have not been complied with
- You want the project completed, not just your own money back
What homebuyers should know first
You are a financial creditor
Amounts paid by an allottee under a real estate project are treated as a financial debt. This was added to the IBC in 2018 and upheld by the Supreme Court in Pioneer Urban Land v Union of India (2019).
The joint filing rule
Since 2020, a petition by allottees must be filed by at least 100 allottees of the same project or 10% of the total allottees of that project, whichever is less. The Supreme Court upheld this rule in Manish Kumar v Union of India (2021).
Same project, not same builder
The count is per real estate project. Buyers of different projects of the same builder cannot be added together to meet the number.
Genuine buyers versus investors
The Supreme Court has drawn a line between genuine homebuyers and speculative investors whose agreements promise buy-back or assured returns. Speculative claims may be examined more closely, so the group's composition matters.
Your vote in the process
After admission, homebuyers vote as a class in the committee of creditors through an authorised representative. Large projects often give homebuyers a decisive share of the vote.
Project-wise resolution
Tribunals have, in several cases, confined the process to the stalled project rather than the builder's entire business. The 2026 amendment also expressly allows resolution plans that deal with assets separately.
How the petition is built
Form the group and verify allottees
We help the association prepare a list of allottees with flat numbers, agreement dates, amounts paid and contact details. Each joining buyer signs an authorisation. Getting this list right is the most time-consuming part, and the one most often challenged.
Check the default
For a builder, the default is usually the failure to give possession by the agreed date, or failure to refund after cancellation or a RERA order. We work out the date of default for the group and check limitation.
Collect documents per buyer
Builder-buyer agreements, allotment letters, payment receipts, bank statements, demand letters and any RERA orders. We prepare a consolidated chart so the tribunal can see the numbers at a glance.
Propose an insolvency professional
Real estate insolvencies need a professional with construction experience. We help the group choose one and obtain written consent.
File in Form 1 before the right bench
The petition is filed before the NCLT bench covering the builder's registered office. For many NCR builders that is NCLT New Delhi, Allahabad or Chandigarh. See which NCLT bench.
Admission and what follows
Once admitted, a moratorium protects the company, the resolution professional takes charge of the project, buyers file claims in Form CA and elect their authorised representative. A resolution plan, often from a new developer, decides how the project will be completed.
Insolvency or RERA? An honest comparison
Homebuyers often ask which route is better. There is no single answer, but these points help.
When insolvency can help
- The builder has abandoned the project and has no plan or money to finish it.
- Funds appear to have been diverted to group companies, and only a resolution professional with investigation powers can trace them.
- Many buyers want the project completed and a new developer is likely to be interested.
- RERA orders have been passed but the builder ignores them.
When RERA is usually better
- You want your own refund with interest, not a collective process.
- The builder is still building, only late.
- The group is too small to meet the 100 or 10% rule.
- The project has heavy secured lender debt, which may push homebuyers down in a resolution.
A RERA complaint can be filed by a single buyer and gives individual relief such as a refund with interest or delay interest. Our sister site covers RERA refund with interest in detail. The two routes can also run one after the other: many groups start with RERA and move to insolvency when orders are not complied with.
Time and typical cost
Fees for group petitions are usually shared among members and agreed in writing at the start. They never depend on the result.
| Stage | Usual time | What it involves |
|---|---|---|
| Organising the group and allottee list | 3 to 8 weeks | Association meetings, authorisations, data collection |
| Drafting and filing | 2 to 4 weeks after data is ready | NCLT filing fee as per rules (shared by the group); our fee |
| Hearing up to admission | Due in 14 days by law; in practice weeks to months | Hearings; the builder will usually oppose |
| Resolution process | 180 days, extendable to 330 days; real estate cases often run longer in practice | Claims, CoC meetings, plan approval |
| Completion under a plan | Depends on the plan | Usually staged construction with monitoring |
Documents each buyer should collect
Purchase documents
- Builder-buyer agreement or allotment letter
- Booking form and application receipt
- Tripartite agreement (if under a subvention or bank loan)
Payment proof
- Payment receipts issued by the builder
- Bank statements showing payments
- Home loan sanction and disbursement letters
Default evidence
- Possession date as per the agreement
- Demand letters and construction-linked payment notices
- Emails and letters to the builder about delays
- Cancellation letters and refund requests
Orders and complaints
- RERA orders, recovery certificates, consumer forum orders
- Any police complaint or FIR about diversion of funds
- Association resolutions and authority letters
How we work with homebuyer groups
- We start with the numbers: we verify that the 100 or 10% requirement is met for the specific project before anything is filed.
- One point of contact: we work through the association's committee, so hundreds of buyers are not chasing updates individually.
- Clear advice on risks: insolvency can delay possession further if no good bidder comes. We say this upfront.
- After admission too: we help buyers file claims, choose their authorised representative and assess resolution plans. See objecting to a resolution plan.
- Shared fees in writing: fees are agreed in writing with the association and never linked to the outcome.
A stalled tower and a 10% group
Here's a made-up example. A Greater Noida project had 640 allottees. Possession was due in 2021; construction stopped in 2023. Some buyers had RERA refund orders the builder never honoured.
Ten percent of 640 is 64, which is less than 100, so 64 allottees of that project were enough. The association collected agreements and payment records from 82 buyers who were willing to join, and we filed a joint Section 7 petition before NCLT Allahabad, the bench for the builder's registered office in Noida. After admission, the homebuyers as a class held most of the committee's voting share. A resolution plan from another developer, with staged completion and an escrow mechanism, was later approved.
Mistakes homebuyer groups make
- Counting buyers across projects: the 100 or 10% rule is per project. Adding buyers from the builder's other towers or phases registered as separate projects can sink the petition.
- Including cancelled or resold units without checking: a buyer who has already taken a refund or sold the allotment may not count. Verify each allottee's status.
- Weak documents for some members: a petition is only as strong as its weakest records. Fill gaps in payment proof before filing.
- No agreed decision-making: decide in advance how the group will take decisions on settlement offers and plans. Disagreements after filing weaken the group.
- Ignoring the lenders: if the project is mortgaged to a bank, the bank will also sit on the committee. Understand the debt picture before filing.
- Expecting quick possession: insolvency is a route to a resolution, not a shortcut to keys. Plan for a process that may take a year or more.
What happens to your flat during the process
Once the builder is admitted into insolvency, the resolution professional takes charge of the project. Construction may pause while the professional assesses funds and contractors, or it may continue if the committee approves interim finance. Your agreement is not cancelled; your claim, filed in Form CA, represents your rights.
The resolution plan decides how your flat will be completed and handed over, and whether you must pay any balance. Some plans offer refund options at a discount for buyers who want out. Homebuyers vote as a class through an authorised representative, so the group's instructions to that representative are crucial. If a plan treats you unlawfully, for example by changing your unit without fair treatment, it can be challenged. See objecting to a resolution plan.
If you hold a RERA order for refund or delay interest, it becomes part of your claim. The moratorium stops its execution against the builder company during the process, but the order is evidence of the amount owed.
Checklist for a homebuyer group
- Count allottees in the same project who will join (at least 100 or 10%)
- Collect allotment letters and builder-buyer agreements
- Gather proof of payments, including bank statements
- Get RERA registration details and status of the project
- Check the builder's default (delay, missed possession date, refund orders)
- Prepare a list of all applicants with amounts paid
- Choose an authorised representative for the group
- Decide whether RERA or NCLT gives the better result
RERA or NCLT: which route
Homebuyers often have both routes available. RERA can order a refund with interest, or possession with compensation for delay, and its orders can be recovered as arrears of land revenue. The NCLT, through CIRP, takes the project out of the builder's control and puts it under a resolution professional, with the aim of finding a resolution applicant to complete it.
The choice depends on what homebuyers want. If most buyers want their homes and the builder has money but lacks will, a CIRP may give them a stronger voice through the CoC. If buyers want refunds and the builder has assets, a RERA order may be faster. Some groups pursue both. For RERA refunds, see refund with interest. If CIRP has already started, homebuyers must file claims in Form CA.
Project-wise insolvency for a stalled tower
Here's a made-up example. A Noida builder had three projects. Two were nearly complete, but construction had stopped on a third, with 300 buyers waiting for more than five years. A group of 120 buyers from the stalled project filed under Section 7 before NCLT New Delhi.
Following the project-wise approach taken by the NCLAT in Flat Buyers Association Winter Hills-77 v Umang Realtech (2020), the NCLT confined the CIRP to the stalled project, leaving the other two projects with the builder. A resolution applicant proposed to complete the tower, and the buyers, voting through their authorised representative, approved the plan. Construction restarted within months.
Frequently Asked Questions
Can one homebuyer file insolvency against a builder?
No. Allottees must file jointly: at least 100 allottees of the same project or 10% of its total allottees, whichever is less.
Can buyers from different projects of the same builder join together?
Not to meet the number. The 100 or 10% count is per real estate project.
Will I get my flat or my money back?
It depends on the resolution plan. Most plans aim to complete construction and hand over flats. Refunds are possible but are often partial. Recovery is not guaranteed.
What happens to my RERA case after insolvency starts?
Once the builder is admitted into insolvency, a moratorium generally stops RERA and other proceedings against the company for money claims. You file your claim with the resolution professional instead.
What if the builder's lenders have a mortgage on the project?
Secured lenders also sit on the committee of creditors. How the project and the money are shared depends on the plan and on voting. This is one reason we look at the project's debt before advising a group.
How long does the whole process take?
The law allows 330 days at most for the resolution process, including litigation. Real estate cases often run longer in practice, especially if plans are challenged.
What does the group need to pay?
Filing fees and our fees, usually shared among members. We agree the fee structure in writing with the association before starting.
Is there an alternative to insolvency?
Yes. A RERA complaint for refund or delay interest, or a consumer complaint, can be filed individually. These give personal relief rather than a collective solution.
Talk to Us as a Homebuyer Group
Ask your association to share the project details and the number of buyers ready to join. We will tell you whether a petition is viable and what it involves.
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.
Need help with Homebuyers' Insolvency Petition Against a Builder?
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.
