INTRODUCTION
On 9 September 2025, in Amit Nehra & Anr. v. Pawan Kumar Garg & Ors. (2025 INSC 1086), the Supreme Court of India issued a significant ruling relating to homebuyer rights in insolvency processes, explicitly ordering possession of a flat in the IREO Rise (Gardenia) Project, Mohali, to be delivered to the appellants within two months, while overturning the NCLT/NCLAT’s contrary findings. This order will affect thousands of home buyers likely to face the same insolvency issue in several more hundreds of cases around the country.
BACKGROUND
The dispute stems from events that started in 2011, when the appellants booked an apartment at IREO Rise, a project by Puma Realtors Pvt. Ltd. (IREO Group) in Mohali. They paid ₹57.56 lakh of the total ₹60.06 lakh consideration, and they were to receive possession by November 2013. The possession was never given.
In 2018, CIRP proceedings would be initiated against Puma Realtors. The appellants were to submit their claims in 2019-2020, and the claims were verified and granted, which was included in the list of financial creditors by the Resolution Professional, however, the Resolution Plan sanctioned by NCLT treated the appellants as belated claimants providing partial refund as 50% of the principal investment instead of giving them possession of the flat. The NCLT and the NCLAT upheld that treatment, ruling that because the claim was filed late, there was no option for them to seek possession. Naturally, aggrieved, they went to the Supreme Court.
KEYPOINTS
- Character of Niche Claims under the IBC: Homebuyers are specifically recognized as financial creditors pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016. Homebuyers’ claims are deemed verified and accepted quantum once they are accepted. Homebuyers would be treated equally along with other creditors in the resolution.
- Dispute on the Specifics of Late Claims: The primary contention revolved around Clause 18.4(xi) which limited benefits of late or unverified claims to a 50% refund. The appellants stated that once the claims were verified and accepted, they fell under Clause 18.4(vi)(a) as verified homebuyers had the right to possess the property.
- Function of NCLT and NCLAT: Both the NCLT and NCLAT endorsed the view of the Resolution Professional that the appellants claim could be reducible as it was late. Interestingly, both tribunals ignored the fact that the appellants’ claim was already admitted and also acknowledged at Serial No. 636 in the list of verified financial creditors.
- Supreme Court Ruling: The Supreme Court held that there was no room for doubt that once a claim is admitted and verified, the claim has been lawful recognized in full and treating homebuyers as though a claim was late or has otherwise succumbed to the unlimited combination of claims would be incorrect and unfair. The court indicated that insolvency laws cannot be understood to strip lay claimants of their rights to possession or interest simply because they have a negative disclosure of some sort in processing the claim.
RECENT DEVELOPMENTS
This verdict builds upon a set of supreme court decisions that have been increasingly expanding and protecting homebuyer rights under the IBC. In Pioneer Urban Land v. Union of India AIR 2019 SC 4055, the supreme court sanctioned the classification of homebuyers as financial creditors and granted them representation on the Committee of Creditors (CoC). In Manish Kumar v. Union of India writ petition(C) no.26 of 2020, the court emphasized that homebuyers are not simply allottees, but participants in the insolvency resolution process.
Earlier this year, a series of decisions from the High Courts and the NCLAT had left homebuyers in a state of uncertainty when their claims were either declared belated, or recognized only partially. The present ruling clarifies the confusion by stating that, once verified, a claim cannot be reduced. In practical terms, this ruling will impact not only the IREO group projects but also other stalled projects across the country where homebuyers may have been delayed or partially refunded or denied possession. It conveys an unmistakable message that resolution plans have to respect verified claims and relates to steps taken to effectuate possession, when it comes to possession.
CONCLUSION
The judgment issued by the Supreme Court of India in Amit Nehra & Anr. v. Pawan Kumar Garg & Ors. case is certainly a watershed decision in the emerging field of insolvency jurisprudence. It reaffirmed the idea that insolvency proceedings are to be used to restore companies and balance the interest of creditors, but not at the cost of homebuyers who invested their lifetime savings into housing projects. In recognizing NCLT and NCLAT restrictive take on advancement of verified claims, the court restored faith in the IBC architecture as a tool for not only imposing financial discipline but also for serving social justice. No triviality can be afforded to verified claims once they are accepted as having a binding recognition.
This judgment will serve as a lead case for future disputes, providing lawyers and practitioners with a stronger legal footing in advancing their clients’ case. It further reminds stakeholders that insolvency law requires commercial expediency and fairness.
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Written by- Anwesha Anant
