Elegna Co-op. Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Company Limited & Anr.

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13.22. Accordingly, we hold that • The right to initiate or participate in insolvency proceedings is statutory, not equitable. • A society or Resident Welfare Association, not being a creditor in its own right and not recognised as an authorised representative of allottees under the IBC, has no locus standi to intervene in proceedings arising out a Section 7 petition. • The NCLAT was justified in rejecting the Society’s intervention application. • No prejudice has been caused to homebuyers, whose interests are adequately safeguarded under the Code.

14. At this juncture, we may aptly refer to the decision in Mansi Brar Fernandes v. Shubha Sharma and another28, wherein while dealing with the growing misuse of the insolvency framework by speculative investors in real estate projects, this Bench revisited, reiterated, and consolidated the settled principles governing the interplay between RERA, the Consumer Protection Act, and the IBC. In the said decision, the Court not only underscored the primacy of sector- specific remedies in real estate disputes but also issued a series of consequential directions, recognising the right to shelter as an integral facet of the right to life under Article 21 of the Constitution. The following paragraphs are apposite and merit extraction: “15.2. In this necessary in this backdrop to reiterate certain settled principles: • RERA remains the primary forum for redressal of homebuyers’ grievances; • The IBC is a forum of last resort, intended to secure revival and completion of viable projects, not to serve as a debt recovery mechanism; and • Consumer forums should confine themselves to adjudicating individual service deficiencies, thereby avoiding conflicting or overlapping orders across multiple fora.

28 2025 INSC 1110

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Elegna Co-op. Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Company Limited & Anr.

15.4. Strict adherence to IBC timelines and settled precedent is imperative to realise two complementary objectives: (i)ensuring revival and completion of stalled projects for the benefit of genuine homebuyers; and (ii)curbing speculative activity which has functioned as a “slow poison” for the residential real estate sector and, by extension, the Indian middle class. 18.3.1. The Court further noted that remedies under RERA and the Consumer Protection Act are additional, not exclusive. Both statutes operate alongside the IBC, but with distinct purposes: RERA protects individual investors by enforcing compliance with project obligations, while the IBC operates in rem to revive the corporate debtor and maximise value for all stakeholders. 18.3.2. Importantly, Pioneer Urban held that once a prima facie default is established under Section 7 of the Code, the burden shifts onto the developer to demonstrate that the applicant is a defaulter, or that the process has been invoked fraudulently, with malicious intent, or by a speculative investor. These safeguards were intended to prevent “trigger-happy” investors from destabilising projects or prematurely driving developers into insolvency. 21.2. In exercise of this Court’s jurisdiction, and to advance the constitutional and statutory objectives, the following directions are issued to the concerned authorities, in the larger interests of bona fide homebuyers and the stability of the real estate sector, which demand coordinated action by all stakeholders: … (6) Resolution of real estate insolvency should, as a rule, proceed on a project specific basis rather than the entire corporate debtor, unless circumstances justify otherwise. This would protect solvent projects and genuine homebuyers from collateral prejudice. IBBI shall also devise a mechanism to enable handover of possession

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to willing allottees where substantial units in a project are complete. (8) Regulations shall ensure meaningful representation of allottees in the CoC through authorized representatives, with safeguards against conflicts of interest.”

Conclusion

15. For the foregoing reasons, • The appeal challenging admission of the Corporate Debtor into CIRP is dismissed. • The appeal challenging rejection of the intervention application is also dismissed, subject to the clarification on the limited scope of locus standi and inherent powers. It is clarified that upon commencement of CIRP, any aggrieved stakeholder may avail remedies strictly in accordance with the Code. 15.1. While the commercial wisdom of the Committee of Creditors is paramount and is not ordinarily amenable to judicial review, the width of powers vested in the CoC carries with it a corresponding duty of responsibility. Any extraordinary or non-routine decision taken by the CoC must, therefore, be supported by cogent reasons duly recorded in writing. Accordingly, with a view to advancing transparency, ensuring accountability, and safeguarding the interests of homebuyers, we issue the following directions: i) The Information Memorandum shall mandatorily disclose comprehensive and complete details of all allottees; and ii) Where the Committee of Creditors, upon due consideration, finds it not viable to approve handover of possession in terms of Regulation 4E of the CIRP Regulations, it shall mandatorily record cogent and specific reasons in writing for such decision. iii) Any recommendation for liquidation by the Committee of Creditors shall be accompanied by a reasoned justification recorded in writing, evidencing proper application of mind and due consideration of all viable alternatives, in consonance with the objective of the Code.

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Elegna Co-op. Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Company Limited & Anr.

These directions shall operate prospectively and shall be complied with forthwith.

16. There is no order as to costs. Pending application(s), if any, shall stand disposed of in the above terms.

Result of the case: Appeals dismissed.