WHETHER FLAT BUYERS CAN INITIATE INSOLVENCY PROCEEDINGS AGAINST BUILDERS UNDER THE IBC?

Nikhi l Mehta & Sons (HUF) & Ors. v. M/s AMR Infrastructures Ltd. (NCLT Delhi), 
C.P NO. (ISB)-03(PB)/2017, decided on 23.01.2017

In this case the NCLAT has ruled that a purchaser of real estate, under an 'Assured-return' plan, would be considered as a 'Financial Creditor' for the purposes of IBC and is, therefore, entitled to initiate corporate insolvency process against the builder, in case of non-payment of such 'Assured/Committed return' and non-delivery of unit. NCLAT further went on to rule that the 'debt' in this case was disbursed against the consideration for the 'time value of money' which is the primary ingredient that is required to be satisfied in order for an arrangement to qualify as 'Financial Debt' and for the lender to qualify as a 'Financial Creditor', under the scheme of IBC.