Manisha Yadav
On 12 September 2025, the Supreme Court ruled that the focus of real estate insolvency cases should be on specific projects. In a landmark ruling, the Supreme Court held that insolvency proceedings involving real estate firms should generally focus on individual projects rather than the entire company, unless there are exceptional circumstances.
This ruling aims to protect the interests of lawful homebuyers while preserving clarity in the insolvency procedures under the Insolvency and Bankruptcy Code (IBC). The appeals that resulted in the ruling involved two real estate firms, Gayatri Infra Planner Pvt. Ltd. & Antriksh Infratech Pvt. Ltd. When buy-back and refund clauses in contracts they had signed were not fulfilled, investors in these cases attempted to initiate Corporate Insolvency Resolution Proceedings (CIRP) in accordance with Section 7 of the IBC.
The Supreme Court maintained the National Company Law Appellate Tribunal’s (NCLAT) previous decision to deny the applications. The Court noted that because the appellants were speculative investors rather than real homebuyers, they could not be considered financial creditors eligible to initiate insolvency proceedings.
To help differentiate between actual buyers and speculative investors, the Court provided a list of several indicators. Under the Real Estate (Regulation and Development) Act, 2016 (RERA), these include contracts that prioritise buyback or refund options over property possession, demands for high-interest returns over property delivery, ownership of multiple units by the same person, special terms in contracts that are not typical of standard agreements, and promises of unreasonably high returns in a short period of time.
By encouraging a project-specific approach, the Court seeks to prevent insolvency claims arising from unconnected or isolated grievances interfering with solvent and ongoing real estate developments. This decision provides courts and tribunals with more specific guidance when managing real estate insolvency cases and upholds the legislative intent behind recent IBC amendments. Ultimately, by prohibiting the misuse of insolvency procedures, this decision is viewed as a significant step in protecting legitimate homebuyers and discouraging speculation in the real estate sector.
Case Title: Mansi Brar Fernandes & Ors. v. Shubha Sharma & Ors.
Case Citation: 2025 INSC 1110
Bench: Justice J.B. Pardiwala And Justice R. Mahadevan
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