Belated claims by Homebuyers in a Corporate Insolvency Resolution Process: Admissible or not?

July 28, 2025

Introduction:

The insolvency of a real estate developer often results in significant uncertainty and financial distress for homebuyers and unit-holders. Questions concerning possession, refund of monies paid, and overall recovery of investment take center stage when such entities are admitted into Corporate Insolvency Resolution Process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“Code”).

Recognizing the unique and vulnerable position of homebuyers in insolvency proceedings, the legislature has accorded them the status of ‘financial creditors’, thereby entitling them to a participatory role in the insolvency process. However, this recognition comes with an attendant duty to timely and appropriately submit their claims. This article delineates the legal framework, procedural requirements, common concerns, and judicial guidance concerning the submission of claims by homebuyers under the IBC. Let’s see how real estate projects can be brought under the ambit of Insolvency and Bankruptcy Code, 2016.

Legal Status of Homebuyers Under the Insolvency Framework:

Prior to the enactment of the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, the position of homebuyers vis-à-vis their claims under the Code was ambiguous. This legislative vacuum was addressed when Explanation (i) to Section 5(8)(f) of the Code was introduced, explicitly recognizing amounts raised from allottees under a real estate project as a ‘financial debt’. Consequently, such allottees were brought within the fold of ‘financial creditors’.

The constitutional validity of this classification was upheld by the Hon’ble Supreme Court in Pioneer Urban Land and Infrastructure Ltd. v. Union of India, wherein the Court observed that homebuyers, though not lending money in the traditional sense, finance the real estate project and thus fall within the extended definition of financial creditors. This legislative and judicial affirmation entitles homebuyers as financial creditors to:

File claims before the IRP/RP of the defaulting real estate company;
Be represented in the Committee of Creditors (“CoC”) through an authorized representative; and
Participate in decision-making, including voting on resolution plans or liquidation proposals.

Delay in submission of claim by Home-buyers:

One of the most common issues amongst homebuyers in IBC proceedings pertains to delay in filing claims. Although the statutory deadline is 14 days from the date of public announcement of CIRP of Corporate Debtor, courts and tribunals have adopted a pragmatic approach. There are three consequences of delay in filing claims (i) Condonation of Delay, (ii) Delay not condoned but not extinguished and (iii) Extinguishment of right.

Condonable Delay (upto 90 Days): While the standard period for claim submission is 14 days or the last date mentioned in the public announcement, Regulation 12(2) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 (“CIRP Regulations”) allows for claims to be filed up to 90 days from the insolvency commencement date. Courts have held this timeline to be directory, not mandatory, allowing for some flexibility. For instance, in State Tax Officer v. Rainbow Papers Ltd., the Supreme Court observed that timelines for claim submission are not mandatory and can be extended in certain circumstances.

Non – condonable Delay (post 90 Days): Claims submitted after 90 days are generally not accepted by resolution professional. However, if this is prior to the approval of resolution plan by the CoC (which is usually the case), the creditor could apply to the Adjudicating Authority for condonation.

Extinguishment of Claims (approval of CoC): It’s important to note that once the resolution plan is approved by the Adjudicating Authority, all claims not part of the plan stand extinguished. This principle was upheld by the Supreme Court in Ghanashyam Mishra & Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, where it was held that upon approval of the resolution plan, all claims not included in the plan are deemed extinguished, and no further proceedings can be initiated in respect of such claims. Specifically, the judgment of RPS Infrastructure v Mukul Kumar states that claims after approval of resolution plan by the CoC cannot be allowed as the successful resolution applicant cannot be sprung with surprises with hydra-heads popping.

Important exception: Puneet Kaur Versus KV Developers Private Limited: Company Appeal (AT) (INS) No. 390/2024 provides a nuanced perspective. In this case, the Hon’ble NCLAT held that even when a homebuyer’s claim is filed belatedly, it should still be considered if the claim is reflected in the corporate debtor’s records and the RP is obligated to include such claims in the Information Memorandum, as per Regulation 36(2) of the CIRP Regulations, which mandates the inclusion of all assets and liabilities of the corporate debtor. This principle after long got reiterated in the case of Rahul Jain v Nilesh Sharma, RP of Dream Procon and further in the case of Sonia Kapoor v Nilesh Sharma, RP of of Dream Procon

Conclusion:

The recognition of homebuyers as financial creditors under the Insolvency and Bankruptcy Code, 2016, marks a pivotal development in Indian insolvency jurisprudence. This legislative reform not only acknowledges the critical financial contribution made by allottees in real estate projects but also safeguards their interests by granting them a voice in the resolution process of defaulting real estate companies.

However, this recognition is not merely symbolic, it demands procedural vigilance. It will only be effective on the proactive participation of homebuyers as financial creditors, beginning with the timely and accurate submission of claims. The importance of adhering to prescribed formats, providing comprehensive documentary evidence, and respecting statutory timelines cannot be overstated. Procedural lapses, delays, or incomplete documentation may result in exclusion from the Committee of Creditors or loss of voting rights, thereby undermining the substantive rights conferred under the Code.

Moreover, while the Resolution Professional is tasked with ensuring fair verification and representation, the onus remains on the claimant to present a legally sound and factually complete claim. In this regard, the role of legal counsel becomes critical, particularly in guiding homebuyers through the nuances of form selection, claim drafting, and interaction with the RP or CoC.