Rejection of Section 7 Application filed by the Appellant ...
Insolvency and Bankruptcy
April 13, 2024
Rejection of Section 7 Application filed by the Appellant (homebuyers) on the ground of non-compliance of Section 7, sub-section (1), 2nd Proviso - decree-holder is class of Financial Creditor or not - The tribunal noted that the appellants were only four in number, whereas the total units allotted were 488. The Code requires that a petition on behalf of homebuyers (as financial creditors in a class) is maintainable only if either 100 in number or 10% of the total allottees join the petition. The appellants did not meet this threshold. - Regarding the argument of Finacial Credit: the tribunal disagreed, referencing the definition under the IBC that includes financial creditors as those to whom a financial debt is owed. The tribunal highlighted that despite the RERA order, the appellants remained allottees and thus were required to meet the threshold set out u/s 7 of the Code.
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