INTRODUCTION
There are many sectors in the economy, and the most important among them is the real estate sector, which concerns relating to property, buildings, and land, which is the backbone of the Infrastructure of the country. In every sphere of life disputes are bound to happen to protect it RERA bodies came into being and RERA ACT,2016. Now this act always didn’t had smooth functioning there are bound to be confusion which is ultimately for the courts to Interpret it. We know about the Doctrine of Reasonable classification which act as an exception to article 14 and is well known doctrine in Constitution of India and there was issue regarding the applicability of this doctrine in Real estate sector . One such came in the form of an appeal before the Hon’ble Supreme Court, which was finally settled in 2023.
FACTS
The appellants challenge a decision of the National Company Law Appellate Tribunal, New Delhi which ruled that as beneficiary of a decree by the Uttar Pradesh Real Estate Regulatory Authority (hereinafter referred to as “UPRERA”), the order of the Resolution Professional (R.P.) proposing that they be treated differently from other home buyers allottees.The appellants are home buyers, who had opted for allotment in a real estate project of the respondent company (hereinafter referred to as “BullandBuildtechPvt. Ltd.” or “the respondent”. Aggrieved by the detention in the completion of the design, the petitioners approached the UPRERA which by its orders upheld this annuity to reimburse quantities deposited by the, together with interest. In the meantime proceedings under the Insolvency and Bankruptcy Code, 2016( hereinafter appertained to as “ IBC ”) were initiated. In the course of proceedings after due consultations by the Committee of Creditors, a resolution plan was presented to the adjudging authority. In that plan, a distinction was made between home buyers, who had decided or tagged for other remedies similar as i.e. applying before the RERA and having secured orders in their favour, and those who did n’t do so. Home buyers who did n’t approach authorities under RERA were given the benefit of 50 better terms than that given to home buyers who approached authorities against the deficiency in service by the respondent.
ISSUES
*WHETHER APPEAL SHOULD BE ALLOWED?
*WHETHER DISTINCTION BETWEEN HOME BUYERS IS VIOLATIVE OF ARTICLE 14?
*WHETHER DISTINCTION AMOUNT TO REASONABLE CLASSIFICATION UNDER ARTICLE 14?
*WHETHER APPELLANTS ARE WITHIN THE DEFINITION OF FINANCIAL CREDITORS?
CONTENTIONS
ARGUMENTS FROM THE APPELLANT SIDE
* Mr. Abhimanyu Bhandari learned counsel argued that having regard to the description of fiscal debt( Section 5( 8)( f)) which was amended in 2018 after which home buyer allottees in real estate systems also fell within the broad description of fiscal creditors, a distinction can not be made between one set of similar home buyer allottees and another.
* The act of respondent amounts to violation of Article 14 of constitution of India and doesn’t quantum to reasonable bracket as no reasonable nexus.
* They took support of decision of NCLT, Mumbai Bench- IV, Mr. Natwar Agrawal( HUF) vs. Ms. Sakash Developers & Builders Pvt. Ltd.) which inter alia held as follows “. Consequently, this bench is of the considered view that decree would be distributed as either fiscal or functional debt depending on the nature of the underpinning claim which stands formed through the arbitral or court the nature of the debt due under decree would depend on the nature of sale from which the decretal debt has arisen. In the present case the aspirant had attained a decree from RERA in capacity of allottee in a Real Estate Project and allottee in Real Estate Project is covered under the description of Financial Debt contained in under Explanation to Section 5( 8)( f) of the law. Consequently, the aspirant, being holder of a decree in capacity of allottee is a fiscal Creditor.
RESOINDENT CONTENTIONS
* Mr. GunjeshRanjan appearing for the resolution professional defied the appeal and gratified that the petitioners can not be permitted to secure two benefits. Having approached the UPRERA, they fell into a different sub-class of home buyers, who were entitled to specified quantities and, thus, were relaxed creditors, as compared with allottees who had not invoked RERA remedies and Hence this amounts to reasonable bracket under Article 14 so this is not violative of Article 14.
* They submitted that home buyers relinquished their rights under Section 18 of the RERA Act.
* They contend that the preface of the explanation through correction of 2008 home buyers and allottees of real estate systems were included in the class of “ fiscal creditors ”- because fiscal debt is owed to them. On a plain reading of Section 5( 8)( f) no distinction is per se made out between different classes of 5 fiscal creditors for the purposes of drawing a resolution plan.
* The Resolution Professional’s view appears to be that once an allottee seeks remedies under RERA, and opts for return of plutocrat in terms of the order made in her favour, it is n’t open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It’s only home buyers that can approach and seek remedies under RERA – no others. In similar circumstances, to treat a particular member of that class else for the purposes of another enactment, on the ground that one or some of them had tagged to take back the deposits together with similar interest as ordered by the competent authority, would be largely inequitable.
JUDGEMENT
A single judge bench headed by Ravindra Bhat answered the first and alternate issue in affirmative and allowed the appeal by holding as farther ” As held in Natwar Agarwal by the Mumbai Bench of National Company Law Tribunal the underpinning claim of an displeased party is formed in the form of a Court order or decree. That doesn’t alter or disturb the status of the concerned party- in the present case of allottees as fiscal creditors. likewise, Section 238 of the IBC contains a non obstante clause which gives booting effect to its Provision. Accordingly, its Provisions acquire primacy and can not be read as inferior to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to a “hyper bracket” and falls afoul of Article 14. Such an interpretation can not, thus, be countenanced. ” In view of the anteceding reasons, the impugned order is hereby set away; the petitioners are declared as fiscal creditors within the meaning of Section 5( 8)( f)( Explanation) and entitled to be treated as similar along with other home buyers fiscal creditors for the purposes of the resolution plan which is awaiting final decision before the adjudging authority.
CONCLUSION
So we can see that how difficult question arise in this case but the supreme court gave the decision in the best interest of parties and the decision was just and welcoming in nature as it prevented the discrimination and the arbitrary decision of the government which is the duty of judiciary.This is one of the most landmark judgements in Real estate sector and act as precedent for many cases ahead.This Judgment also brought into notice another fact that the Doctrine of reasonable classification doesn’t apply liberally to Economic matters particularly Real estate sector as the court always adopt a strict and narrow approach in such matters.I think this narrow Interpretation of the court should change and a liberal Interpretation must be followed.
REFERENCES
*IBC LAWS, https://ibclaw.in/case-name/vishal-chelani-ors-vs-debashis-nanda-rp-bulland-buildtech-pvt-ltd/, Last accessed on 12 August
*CNBC TV,https://www.cnbctv18.com/real-estate/legal-digest-insolvency-sweepstakes-heres-what-a-homebuyer-with-refund-decree-is-privileged-to-17562991.htm/amp, Last accessed on 12 August
*The Daily Guardian,https://thedailyguardian.com/supreme-court-should-homebuyers-who-secure-decree-for-refund-from-rera-be-treated-as-financial-creditors/, Last accessed on 12 August
Cases
Mr. Natwar Agrawal (HUF) vs. Ms. Sakash Developers & Builders Pvt. Ltd, CP No.21/MB-IV/2023
The blog is authored by Mr Pranav Billa of Vivekananda Institute of Professional Studies Delhi