Case Overview

This order pertains to IA No.3045 of 2024 in CP (IB) No.1420 of 2020, filed under Section 65 of the Insolvency and Bankruptcy Code, 2016. The applicant, K. D. Lite Developers Private Limited (Corporate Debtor), sought dismissal of an insolvency petition filed against it by 18 allottees (originally 20) of its real estate project 'Ruparel Orion', a slum rehabilitation scheme in Chembur, Mumbai.

The Corporate Debtor alleged the petition was filed fraudulently or with malicious intent, arguing that: 1) The petitioners failed to meet the 10% allottee threshold required under Section 7(1) of the IBC, 2) The petitioners were speculative investors, not genuine homebuyers, and 3) Two petitioners (Original Petitioner Nos. 9 and 12) had already settled and withdrawn from the petition.

The dispute centered on the total number of allottees. The petitioners relied on the MahaRERA website, which showed 124 allottees as of the filing date (03.12.2020), making their 20 petitioners (~16%) sufficient. The Corporate Debtor claimed the actual number was 203, blaming COVID-19 for delayed website updates.

The Corporate Debtor highlighted the petitioners' demand for 24% compound interest on a principal of ₹5.98 crore, which ballooned the claim to ₹32.6 crore. It argued their conduct—not seeking possession, describing themselves as "investors," and some having booked flats in other projects of the Ruparel Group—proved their speculative intent.

The petitioners denied these allegations, maintaining they were genuine allottees and that the RERA website data was the only reliable source for determining the threshold.

Final Outcome

The Tribunal partly allowed the application and dismissed CP (IB) No.1420 of 2020 as not maintainable. It held:

1. On the Threshold: The information on the MahaRERA website as of the filing date is the definitive source for determining the 10% threshold. With 124 allottees shown, the 20 petitioners met the requirement. Subsequent settlements or allotments are irrelevant to this assessment.

2. On the Nature of Petitioners: Applying the tests from Pioneer Urban and Mansi Brar Fernandes, the Tribunal found the petitioners were speculative investors. Key factors included: the high 24% interest clause meant to deter default (equally applicable to both parties); their focus in correspondence solely on refund and interest, not possession; their status as high-net-worth professionals; and their description of the transaction as an "investment.

3. Conclusion: As speculative investors, the petitioners could not invoke the insolvency resolution process, which is intended for genuine homebuyers and corporate rescue. The petition was not filed for the purpose of resolving insolvency.

The dismissal is without prejudice to any other legal rights available to the petitioners. No costs were awarded.

Topics: Insolvency Threshold, Real Estate Allottees, Speculative Investment