Home Buyers’ Rights in Insolvency Proceedings.
Supreme Court Clarifies Home Buyers’ Rights in Insolvency Proceedings: New Delhi, September 9, 2025 — In a landmark judgment, the Supreme Court on Tuesday held that homebuyers cannot be denied possession of their flats if their claims have been verified and admitted by the Resolution Professional (RP) in an insolvency resolution process. The Court emphasized that once a claim is duly verified, it cannot be treated as “belated” or downgraded merely due to delayed filing.
A bench consisting of Justices Sanjay Kumar and Satish Chandra Sharma ruled in favor of two homebuyers, Amit Nehra and another appellant, whose claims for possession were previously denied by the Resolution Applicant under an insolvency resolution plan.
The appellants, who had booked an apartment in 2010 by paying ₹57.56 lakh out of a total consideration of ₹60.06 lakh, had faced repeated delays in possession as the developer failed to deliver. Insolvency proceedings were initiated against the developer in 2018, and despite the homebuyers’ claims being verified and admitted by the RP, the final resolution plan, approved in 2021, placed their claims under a residual clause that limited them to a partial refund.
The appellants’ initial claims were disputed by the Resolution Professional in 2019, but they were later invited to resubmit their claims in 2020. The homebuyers complied, and their claims were verified and included in the RP’s list of financial creditors in April 2020. However, despite this, the Resolution Applicant refused to grant them possession, citing the delayed filing of their claim.
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The NCLT and NCLAT, in their previous rulings, upheld this decision, confining the appellants to the limited benefit under Clause 18.4(xi) of the resolution plan, which applies to unverified or unfiled claims.
In its judgment, the Supreme Court criticized the lower tribunals for treating the appellants’ claims as unverified, despite them being duly verified and reflected in the list of financial creditors. Justice Sharma, in the court’s opinion, stated: “To disregard such an admitted claim and confine the Appellants to the limited benefit under Clause 18.4(xi) is not to preserve the binding effect of the plan but to misapply it.”
The Court further noted that relegating homebuyers—who had invested significant sums of money years in advance—into the category of “refund claimants” was inconsistent with the objectives of the legislative framework designed to protect homebuyers in insolvency proceedings. The judgment highlighted the plight of individual homebuyers who, having invested their life savings in the hope of securing a home, faced undue hardship due to procedural delays.
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Justice Sharma observed: “The facts of the present case highlight the plight of individual homebuyers, who invest their life savings in the hope of securing a roof over their heads. To deny them possession today, despite their claim having been duly verified and admitted, would inflict unfair and unwarranted prejudice.”
As a result, the Court set aside the impugned decision of the lower tribunals and directed the Resolution Applicant to execute the conveyance deed and hand over possession of the flat to the appellants within two months.
This ruling is expected to have a significant impact on similar cases involving homebuyers caught in the insolvency process, ensuring that verified claims are treated equitably and that possession is not unjustly denied to individuals who have already made substantial payments.
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The case title is: AMIT NEHRA & ANR. VERSUS PAWAN KUMAR GARG & ORS.
Key Takeaways:
The Supreme Court emphasized that once a claim is verified and admitted, it cannot be disregarded in the resolution plan.
The Court upheld the rights of homebuyers, ensuring they are not relegated to the status of refund claimants based on procedural delays.
The Court’s decision ensures that homebuyers are treated fairly and justly, particularly those who have paid substantial sums towards purchasing their homes.
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