NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) has affirmed that insolvency proceedings initiated by homebuyers against construction firms must be restricted to the specific project where the default occurred, rather than extending to other projects of the corporate debtor.
The tribunal underscored that jeopardizing unrelated projects does not serve the interests of homebuyers or stakeholders involved in those projects.
“The law is clear that when financial creditors or homebuyers from a single project file a Section 7 application due to default by the corporate debtor, the Corporate Insolvency Resolution Process (CIRP) must be limited to that project,” the NCLAT stated.
A two-member NCLAT bench, addressing an appeal by Navin M Raheja, emphasized that endangering unrelated projects would not benefit homebuyers or stakeholders, insisting that the CIRP is to be contained within individual projects.
Earlier, the NCLAT ruled that the CIRP related only to Raheja Shilas and that this judgment also applies to the current case, maintaining that the ongoing CIRP for Raheja Developers pertains solely to the “Krishna Housing Scheme” and does not impact the entire group.
The tribunal concluded that in project-specific insolvency proceedings, claims from creditors and other stakeholders should be limited to that particular project.
“Naturally, when the CIRP is initiated for a specific project, claims from stakeholders should only pertain to that project,” added the NCLAT bench, which included Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra.
The appellate tribunal also instructed the resolution professional to “issue a corrigendum” in ‘Form-A’ to notify stakeholders of the “Krishna Housing Scheme” to submit claims within 14 days per CIRP Regulations, 2016.
“Considering the decision made today and that the CIRP is confined to the Krishna Housing Scheme, the IRP must publish a reference based on earlier communications, requiring claims to be limited to the Krishna Housing Scheme,” stated the tribunal in its comprehensive 30-page order.
Navin M Raheja has contested a previous decision from the New Delhi Bench of the National Company Law Tribunal (NCLT), which on August 21, 2025, accepted a Section 7 application from multiple flat buyers in the Raheja Krishna Housing Scheme.
This scheme was developed under the Affordable Housing initiative, eligible for benefits from Pradhan Mantri Awas Yojana and Rinn Yojana, consisting of 11 towers, providing 1-2 BHK units with a total of 1,644 residential units, along with commercial facilities.
Raheja argued that construction was adversely affected by the COVID-19 pandemic, causing the project’s costs to escalate from ₹183.36 crore to ₹204 crore, leading to defaults in the completion and possession delivery timelines.
