Best NCLT (Builder Insolvency) Lawyer

When a developer can't pay its debts, the dispute stops being about one buyer's flat and becomes about the whole company. That happens in the National Company Law Tribunal, the NCLT, under the Insolvency and Bankruptcy Code, 2016. Once a developer is admitted into insolvency, RERA complaints and recovery against it generally stop, and every buyer's claim is dealt with in a single process before the tribunal.

The NCLT has become one of the most important forums for NCR home buyers. Some of the region's biggest developers have been through it, and homebuyers now have a defined role in the process as financial creditors, with a vote on how the company is rescued. This page explains how the NCLT works for buyers: which bench, how homebuyers can start insolvency themselves, what happens after admission, and how to protect your position. For the detail on filing a claim, see our page on Form CA claims, and for an overview of buyers' options, builder insolvency. More on the tribunal itself is on our sister site, ncltlawyers.in.

Which NCLT bench

The NCLT sits in benches across the country. The bench that hears a developer's insolvency is decided by the location of the developer company's registered office, not by where its projects are. For NCR buyers, the most relevant benches are:

• New Delhi, which has the principal bench and several other courts, for companies registered in Delhi. Many NCR developers, including some with projects mainly in Noida or Gurugram, are registered in Delhi.
• Allahabad, for companies registered in Uttar Pradesh (and Uttarakhand), including developers registered in Noida, Greater Noida or Ghaziabad.
• Chandigarh, for companies registered in Haryana, Punjab and some neighbouring states and territories, including Gurugram-registered developers.

Other benches, such as Mumbai, Bengaluru, Hyderabad and Jaipur, deal with developers registered in those regions. Check the developer's registered office from its company filings before filing anything. A buyer in a Noida project may find the developer's case is in New Delhi; a buyer in Gurugram may find it in Chandigarh or New Delhi.

How a developer ends up in the NCLT

Insolvency can be started by:

• financial creditors under Section 7, such as banks, NBFCs and funds that lent to the developer, and also homebuyers, who are treated as financial creditors;
• operational creditors under Section 9, such as contractors and suppliers with unpaid bills; or
• the company itself under Section 10.

The tribunal admits the application if there is a debt, a default of at least the threshold amount (currently Rs 1 crore), and, for a Section 7 application, a complete application. Once admitted, the corporate insolvency resolution process (CIRP) begins.

Homebuyers as financial creditors

In 2018, the Code was amended to make clear that amounts raised from allottees under a real estate project have the commercial effect of a borrowing, so homebuyers are financial creditors. The Supreme Court upheld this in Pioneer Urban Land and Infrastructure v. Union of India (2019). That gave homebuyers two things: the right to start insolvency under Section 7, and a vote in the committee of creditors.

In 2020, a threshold was added. A Section 7 application by allottees of a real estate project must be filed jointly by at least 100 allottees or 10% of the total number of allottees in the same project, whichever is less. The Supreme Court upheld the threshold in Manish Kumar v. Union of India (2021). So a single buyer, or a handful, can no longer start insolvency against a developer; a group of the required size must join.

Should homebuyers start insolvency?

Starting insolvency is a serious step. It can rescue a stalled project by bringing in a new developer through a resolution plan. It can also freeze everything for years, and in the worst case end in liquidation, where buyers recover little. Some questions to ask first:

• Is the developer actually insolvent, or just slow? If it's building and has assets, RERA orders and recovery may get results faster.
• Is the project viable? Land rights, approvals, the state of construction and the money still to be collected from buyers all matter. A viable project attracts resolution applicants; a hopeless one may not.
• What do the other buyers want? Buyers who want flats and buyers who want refunds have different interests, and both will be in the same class.
• What about the development authority's dues? In Noida and Greater Noida, unpaid land dues can dominate a resolution plan.
• Can you reach the threshold? You need 100 allottees or 10% of the project's allottees, whichever is less, joining one application.

We often advise buyers' groups to consider insolvency as a last resort, after RERA orders and recovery have failed, and to talk to buyers across the project before filing.

After admission: what happens

The moratorium

On admission, Section 14 of the Code imposes a moratorium. Proceedings against the developer, including RERA complaints, consumer cases, execution of orders and recovery certificates, generally stop. Its assets can't be transferred or encumbered. The moratorium lasts until the process ends.

The resolution professional

The tribunal appoints an interim resolution professional, who takes over management of the company from its directors and makes a public announcement inviting claims. The committee of creditors later confirms or replaces the resolution professional.

Claims

Homebuyers file claims in Form CA with proof of payments, within the time given in the public announcement. Late claims can sometimes be admitted, but the risk grows as the process advances. Claims that aren't part of an approved resolution plan may be extinguished, following Ghanashyam Mishra and Sons v. Edelweiss ARC (2021). Filing on time, with complete documents, is the single most important thing a buyer can do. See Form CA claims.

The authorised representative

Homebuyers usually form a class of creditors. They vote in the committee of creditors through an authorised representative, an insolvency professional chosen for the class, who must take instructions from the class members and vote according to the majority. Each buyer's voting share is based on the amount of his or her admitted claim. Buyers should respond to the authorised representative's requests for instructions, because votes not cast can affect the outcome.

The committee of creditors

The committee, made up of financial creditors including the homebuyers' class, decides the key questions: whether to approve a resolution plan, which applicant to choose, and how much to pay various creditors. Homebuyers often form a large share of the committee in real estate insolvencies, which gives them real influence.

The resolution plan

Resolution applicants submit plans. In real estate cases, a plan typically sets out how the projects will be completed, the timeline, how much buyers will still pay, what happens to buyers who want refunds, and how other creditors will be treated. A plan needs approval by at least 66% of the committee's voting share, and then the tribunal's approval under Section 31. Once approved, it binds everyone, including buyers who voted against it.

Project-wise insolvency

Large developers often have many projects, some healthy and some stalled. Putting the whole company into insolvency because one project failed can harm buyers in projects that were progressing. In Flat Buyers Association Winter Hills-77 v. Umang Realtech (2020), the National Company Law Appellate Tribunal endorsed a project-wise approach in a real estate insolvency, allowing the process to be limited to the project in default and, in that case, allowing the promoter to complete it under supervision. Later cases, including in the insolvency of a large Noida developer, have also seen the process confined to particular projects. Whether this approach is taken depends on the facts, the tribunal and the applicants' request, but it's an important possibility for buyers in multi-project developers.

Handing over flats during insolvency

A frequent complaint used to be that buyers in completed towers couldn't get possession or registry because the company was in insolvency. Regulations for the insolvency process were amended in 2023 to allow the resolution professional, with the committee's approval, to facilitate possession and registration of units for allottees who have paid in full, during the process. How this works in a particular case depends on the committee, the resolution professional and the tribunal, but buyers who have paid fully should raise it with the authorised representative.

Who can't bid

Section 29A of the Code bars certain persons from submitting resolution plans, including, broadly, promoters and related parties of a company whose account has been a non-performing asset for a year or more, unless they clear the overdue amounts, and persons with certain disqualifications. This is meant to stop the people who ran the company into the ground from buying it back cheaply. In real estate, it shapes who can step in, though the Code has some flexibility for genuine cases.

Withdrawal and settlement

An admitted application can be withdrawn under Section 12A with the approval of 90% of the committee of creditors' voting share. In real estate cases, developers sometimes propose settlements with homebuyers and lenders to get out of insolvency. For buyers, a settlement must be weighed against what a resolution plan might offer, and against the risk that the developer, freed from the process, falls back into default.

Liquidation

If no plan is approved in time, or the committee decides to liquidate, the company goes into liquidation under Chapter III of the Code. Homebuyers' claims are then paid according to the order of priority in Section 53, along with other financial creditors who aren't secured, after secured creditors who enforce their security outside, costs and certain other dues. In practice, buyers in liquidation recover far less than in a resolution. That's why committees in real estate cases usually work hard to approve a plan.

Appeals

• From the NCLT to the NCLAT under Section 61, within 30 days, extendable by 15 days for sufficient cause. The NCLAT sits in New Delhi, with a bench at Chennai.
• From the NCLAT to the Supreme Court under Section 62, on a question of law, within 45 days, extendable by 15 days.

Time limits in insolvency are strict and the tribunals apply them closely. Buyers unhappy with an admission, rejection of a claim, or approval of a plan should take advice immediately.

Personal guarantees by promoters

Lenders to developers often take personal guarantees from the promoters. Part III of the Code allows insolvency proceedings against personal guarantors of corporate debtors, and the Supreme Court upheld the relevant provisions in Lalit Kumar Jain v. Union of India (2021). These proceedings are mostly pursued by lenders, but buyers should know that a promoter's personal assets can, through this route, become part of the picture.

Buyers who want flats and buyers who want refunds

All homebuyers in a project usually sit in the same class, but they rarely want the same thing. Some want their flat finished whatever it takes. Others gave up years ago and want their money back. A resolution plan has to deal with both, and the class's vote is decided by the majority by value of claims.

Plans in real estate cases often offer refund-seekers their principal, sometimes in instalments, with little or no interest, while giving flat-seekers completion with delay interest waived or reduced. Whether that's fair depends on the project and the alternatives. A buyer who has a RERA order for a refund with interest should understand that, after Vishal Chelani v. Debashis Nanda (2023), the order doesn't put him or her in a better class than other allottees. The order makes the amount of the claim clear, but it doesn't guarantee that amount will be paid in full under the plan.

Buyers in each camp do better when they organise, understand what the plan offers them, and give their authorised representative clear instructions.

Development authority dues in UP insolvencies

In Noida, Greater Noida and the Yamuna Expressway, the land under most projects is leased by a development authority, and developers in insolvency often owe the authority large sums in lease premium and interest. How those dues are treated has been litigated heavily. In New Okhla Industrial Development Authority v. Anand Sonbhadra (2022), the Supreme Court held that the Noida Authority's lease dues were not a financial debt, so the authority was not a financial creditor. Later decisions have considered whether such authorities can be treated as secured creditors on the terms of their leases, which affects how much they must be paid under a plan. The answer in a particular case can shape the whole resolution, because a plan that doesn't satisfy the authority may not get the land rights needed to complete the project.

For buyers, the practical point is to ask, early, how the plan deals with the authority's dues and whether the authority has agreed. A plan that ignores the land owner's claims is a plan at risk. The UP government's package for legacy stalled projects adopted in late 2023 has also been relevant in some insolvency cases. See our page on UP RERA.

The project account in insolvency

RERA requires 70% of buyers' money to be kept in a separate project account and used only for that project's land and construction. When a developer goes into insolvency, the question arises whether money in that account is available to all creditors or must go towards completing the project. Resolution plans in real estate cases commonly ring-fence such money for completion, and tribunals have often supported that approach, but the position depends on the facts. Buyers should ask the resolution professional what is in the project account and how the plan treats it. See the 70% account.

Lenders, banks and subvention

Banks and NBFCs that lent to the developer are usually also financial creditors, often with security over the land or receivables. Where buyers took home loans under subvention schemes, the lender may have claims against both the developer and the buyers. These overlapping claims can complicate the vote and the plan. Buyers with subvention loans should file their own claims and check how the lender's claim is treated. See subvention schemes.

Timelines in practice

The Code sets a timeline for the resolution process: 180 days, extendable, with an outer limit of 330 days including litigation, though the Supreme Court has held that the outer limit isn't absolutely mandatory in every case. Real estate insolvencies almost always take longer than the headline figures suggest. Verifying thousands of homebuyer claims, valuing part-built projects, negotiating with development authorities and lenders, and running appeals all add time. Some of the NCR's largest developer insolvencies ran for several years. Buyers should plan on that basis, keep their documents and contact details up to date with the resolution professional, and not assume that silence means nothing is happening.

An illustration

Here's a made-up example. A developer registered in Delhi has three projects: one in Noida, nearly complete; one in Greater Noida West, stalled at the structure stage; and one in Ghaziabad, barely started. Buyers in the Greater Noida West project have RERA orders and recovery certificates, none of them paid.

A group of 140 buyers from that project, together crossing the threshold, files a Section 7 application before the NCLT New Delhi bench, since the company is registered in Delhi. They ask that the process be confined to their project. The tribunal admits the application. The moratorium stops their RERA recovery, and they file Form CA claims with the resolution professional.

The homebuyers' class chooses an authorised representative and, after several rounds, votes in favour of a resolution plan from another developer: completion within 30 months, buyers paying their remaining instalments as construction progresses, delay interest largely waived, and refund-seekers paid their principal in instalments. The committee approves the plan with more than 66% of the vote, and the tribunal approves it under Section 31. Buyers in the Noida project, which wasn't part of the process, take possession as normal.

Not every case goes this smoothly, but it shows how the process can work when buyers act together and the project is viable.

Checklist for buyers when a developer enters the NCLT

1. Check the NCLT bench and case number, and read the admission order.
2. Find the public announcement and note the deadline for claims.
3. File your Form CA claim with complete payment proof, before the deadline.
4. Keep the acknowledgement, and check the list of claims published by the resolution professional.
5. Respond to the authorised representative's requests for voting instructions.
6. If your claim is rejected or admitted for a wrong amount, raise it with the resolution professional and, if needed, the tribunal, promptly.
7. Join or form a buyers' group or association for your project.
8. Keep an eye on whether the process is company-wide or project-wise, and what's proposed for your project.

How we help

We advise buyers and buyers' groups on whether to start insolvency, prepare and file Section 7 applications with the required number of allottees, file and follow up Form CA claims, engage with resolution professionals and authorised representatives, challenge wrongful rejection of claims, and appeal where needed to the NCLAT and the Supreme Court. We work before the NCLT benches at New Delhi, Allahabad and Chandigarh, and with associates elsewhere.

Frequently asked questions

Which NCLT bench will hear my builder's insolvency?

The bench for the place where the developer company's registered office is, not where the project is. Check the company's filings.

Can a single home buyer file insolvency against a builder?

No. Allottees must file jointly: at least 100 or 10% of the project's allottees, whichever is less, under the 2020 amendment upheld in Manish Kumar (2021).

What happens to my RERA case when the builder goes into insolvency?

It is generally stopped by the moratorium. You must file a claim with the resolution professional instead.

What is Form CA?

The form for claims by financial creditors in a class, used by homebuyers, filed with proof of payment within the time in the public announcement.

Do home buyers get a vote?

Yes. They vote through an authorised representative in the committee of creditors, in proportion to their admitted claims.

Can I get possession during insolvency?

Possibly, if you have paid in full. Regulations amended in 2023 allow the resolution professional to facilitate possession with the committee's approval.

Is insolvency limited to my project?

It can be. The NCLAT endorsed a project-wise approach in Umang Realtech (2020), and later cases have followed it on their facts.

How long do I have to appeal an NCLT order?

30 days to the NCLAT, extendable by 15 days for sufficient cause.

General information about real estate insolvency before the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 and related regulations. Thresholds, regulations and tribunal practice change; check the current position for each case. Not legal advice.