VISHAL CHELANI & ORS. versus DEBASHIS NANDA
[2023] 13 S.C.R. 1149, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
CASE DETAILS
VISHAL CHELANI & ORS.
v.
DEBASHIS NANDA
(Civil Appeal No. 3806 of 2023)
OCTOBER 06, 2023
[S. RAVINDRA BHAT AND ARAVIND KUMAR, JJ.]
HEADNOTES
Issue for consideration: The decision of the National Company Law 
Appellate Tribunal that the home buyer as beneﬁ ciary of a decree by the 
Uttar Pradesh Real Estate Regulatory Authority, the order of the Resolution 
Professional proposing that they be treated diﬀ erently from other home 
buyers allottees, does not call for interference, is under challenge.
Insolvency and Bankruptcy Code, 2016 – s.5(8)(f) explanation – 
Financial Creditor – Home buyers allottees in real estate project who 
secured the decree from the Real Estate Regulatory Authority for a 
refund of their investment, if could be treated as ﬁ nancial creditor:
Held: Under explanation to s.5(8)(f) home buyers and allottees of 
real estate projects were included in the class of “ﬁ nancial creditors”, 
because ﬁ nancial debt is owed to them – No distinction is per se made out 
between diﬀ erent classes of ﬁ nancial creditors for drawing a resolution 
plan – Resolution Professional’s view that once an allottee seeks remedies 
under RERA, and opts for return of money in terms of the order made in 
her favour, it is not open for her to be treated in the class of home buyer, 
cannot be accepted – Distinction made by the Resolution Professional is 
artiﬁ cial and fails afoul of Art.14 – To treat a particular segment of that 
class diﬀ erently for the purposes of
another enactment, on the ground 
that one or some of them had elected to take back the deposits together 
with such interest as ordered by the competent authority, would be highly 
inequitable – Underlying claim of an aggrieved party is crystallized in the 
form of a Court order or decree, that does not alter or disturb the status of 
the allottees as ﬁ nancial creditors – Furthermore, s. 238 IBC contains a 
[2023] 13 S.C.R. 1149 : 2023 INSC 913
1149
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SUPREME COURT REPORTS 
[2023] 13 S.C.R.
non obstante clause which gives overriding eﬀ ect to its provisions, thus, its 
provisions acquire primacy, and cannot be read as subordinate to the RERA 
Act – Thus, the impugned order is set aside – Home buyers are declared as 
ﬁ nancial creditors within the meaning of s. 5(8)(f) explanation and entitled 
to be treated as such along with other home buyers/ﬁ nancial creditors for the 
purposes of the resolution plan – Real Estate (Regulation And Development) 
Act, 2016 – s. 18. [Para 6, 8,9]
LIST OF CITATIONS AND OTHER REFERENCES
Mr. Natwar Agrawal (HUF) v. Ms. Ssakash Developers & Builders 
Pvt. Ltd. in CP(IB) No.21/MB-IV/2023 dated 02.08.2023 – approved.
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3806 of 2023.
From the Judgment and Order dated 28.02.2023 of the National 
Company Law Appellate Tribunal, Principal Bench, New Delhi in Company 
Appeal (AT) (Insolvency) No. 991 of 2022.
Appearances:
Abhimanyu Bhandari, Ms. Nattasha Garg, Thakur Ankit Singh, Varun 
M., Ms. Shristy Singh, Ms. Rooh-e-hina Dua, Advs. for the Appellants.
Gunjesh Ranjan, Sidharth Sarthi, Anil Kumar, Shantanu Sagar, Prabhat 
R. Raj, Advs. for the Respondent.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
S. RAVINDRA BHAT, J.
1. The appellants challenge a decision of the National Company Law 
Appellate Tribunal, New Delhi1 (hereinafter referred to as “NCLAT”) 
which ruled that as beneﬁ ciary
of a decree by the Uttar Pradesh Real Estate 
Regulatory Authority (hereinafter referred to as “UPRERA”), the order of 
1 
 . Order dated 28.02.2023 by NCLAT, in C.A.(AT) No. 991/2022
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VISHAL CHELANI & ORS. v. DEBASHIS NANDA
[S. RAVINDRA BHAT, J.]
the Resolution Professional (R.P.) proposing that they be treated diﬀ erently 
from other home buyers allottees, does not call for interference. 
2. The brief facts are that the appellants are home buyers, who had opted 
for allotment in a real estate project of the respondent company (hereinafter 
referred to as “Bulland Buildtech Pvt. Ltd.” or “the respondent”.  Aggrieved 
by the delay in the completion of the project, the appellants approached the 
UPRERA which by its orders upheld this entitlement to refund amounts 
deposited by them, together with interest.  In the meantime, proceedings 
under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred 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 
adjudicating authority.  In that plan, a distinction was made between home 
buyers, who had opted or elected for other remedies such as i.e. applying 
before the RERA and having secured orders in their favor, and those who 
did not do so. Home buyers who did not approach authorities under RERA 
Act were given the beneﬁ t of 50% better terms than that given to those 
who approached RERA or who were decree holders. The appellants felt 
aggrieved; their applications were rejected by the adjudicating authority. 
Their appeals too were unsuccessful. Consequently, they have approached 
this Court.  
3. Mr.
Abhimanyu Bhandari learned counsel argued that having regard 
to the deﬁ nition of ﬁ nancial debt [Section 5(8)(f)] which was amended in 
2018 after which home buyer allottees in real estate projects also fell within 
the broad description of ﬁ nancial creditors, a distinction cannot be made 
between one set of such home buyer allottees and another. He relies upon 
a decision of the NCLT, Mumbai Bench-IV, [Mr. Natwar Agrawal (HUF) 
vs. Ms. Ssakash Developers & Builders Pvt. Ltd.] in CP(IB) No.21/MB-
IV/2023 dated 02.08.2023, which inter alia held as follows: 
“3.2.  Accordingly, this bench is of the considered view that 
decree would be categorized as either ﬁ nancial or operational debt 
depending on the nature of the underlying claim which stands 
crystallized through the arbitral or court the nature of the debt due 
under decree would depend on the nature of transaction from which the 
decretal debt has arisen.  In the present case the applicant had obtained 
a decree from RERA in capacity of allottee in a Real Estate Project
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[2023] 13 S.C.R.
and allottee in Real Estate Project is covered under the deﬁ nition of 
Financial Debt contained in under Explanation to Section 5(8)(f) of the 
Code.  Accordingly, the applicant, being holder of a decree in capacity 
of allottee is a Financial Creditor. 
3.3. At this juncture, this bench considers appropriate whether an 
allottee holding a decree from RERA would fall under the class of 
Home Buyers within the category of Financial Creditor or it would 
cease to be an allottee under the class of Home Buyers, but shall 
remain a Financial Creditor, to determine whether the threshold limit 
prescribed under section proviso to section 7(1) of the Code or under 
section 4 of code would apply.  This bench ﬁ nds that second proviso 
to section 7(1) prescribes the threshold limit speciﬁ cally in relation to 
Home Buyers Class so as to discourage multiple applications being 
ﬁ led by the allottees in a Real Estate Project.  This bench feels that an 
allottee in Real Estate Project, who subsequently becomes a Decree 
Holder under RERA Act, continues to be a creditor in the class of 
Home Buyers and shall continue to be governed by the threshold limit 
prescribed under second proviso to section 7(1) of the Code.”
4. Mr. Gunjesh Ranjan appearing for the resolution professional 
resisted the appeal and contented that the appellants cannot be permitted 
to secure two beneﬁ ts.  Having approached the UPRERA, they fell into a 
diﬀ erent
sub-class of home buyers, who were entitled to speciﬁ ed amounts 
and, therefore, were unsecured  creditors, as compared with allottees who 
had not invoked RERA remedies. It is submitted that such home buyers 
relinquished their rights under Section 18 of the RERA Act. 
5. Section 5 (7) & (8) deﬁ nes “ﬁ nancial creditors” and “ﬁ nancial debt” 
in the following terms:
“ﬁ nancial creditor” means any person to whom a ﬁ nancial debt is owed 
and includes a person to whom such debt has been legally assigned 
or transferred to;”
(8) Financial debt means a debt along with interest, if any, which is 
disbursed against the consideration for the time value of money and 
includes –
(A) money borrowed against the payment of interest;
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(B) any amount raised by acceptance under any acceptance credit 
facility or its de-materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the 
issue of bonds, notes, debentures, loan stock or any similar instrument;
(d) the amount of any liability in respect of any lease or hire purchase 
contract which is deemed as a ﬁ nance or capital lease under the Indian 
Accounting Standards or such other accounting standards as may be 
prescribed;
(e) receivables sold or discounted other than any receivables sold on 
non-recourse basis; (f) any amount raised under any other transaction, 
including any forward sale or purchase agreement, having the 
commercial eﬀ ect of a borrowing;[Explanation----For the purposes 
of this sub-clause,--
(i) any amount raised from an allottee under a real estate project 
shall be deemed to be an amount having the commercial eﬀ ect of a 
borrowing; and
(ii) the expressions, allottee and real estate project shall have the 
meanings respectively assigned to them in clauses (d) and (zn) of 
section 2 of the Real Estate (Regulation and Development) Act, 2016 
(16 of 2016);]
(g) any derivative transaction entered into in connection with 
protection against or beneﬁ t from ﬂ uctuation in any rate or price and 
for calculating the value of any derivative transaction, only the market 
value of such transaction shall be taken into account; 
(h) any counter-indemnity obligation in respect of a guarantee, 
indemnity, bond,
documentary letter of credit or any other instrument 
issued by a bank or ﬁ nancial institution; 
(i) the amount of any liability in respect of any of the guarantee or 
indemnity for any of the items referred to in sub-clauses (a) to (h) of 
this clause;”
The amendment of 2018 introduced an explanation below. Sub-section 
8(f) to Section 5 which reads as follows: 
VISHAL CHELANI & ORS. v. DEBASHIS NANDA
[S. RAVINDRA BHAT, J.]
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SUPREME COURT REPORTS 
[2023] 13 S.C.R.
“(f) any amount raised under any other transaction, including 
any forward sale or purchase agreement, having the commercial eﬀ ect 
of a borrowing;”
[Explanation -  For the purposes of this sub-clause,-
(I) any amount raised from an allottee under a real estate project 
shall be deemed to be an amount having the commercial eﬀ ect of a 
borrowing; and
(ii) the expressions, “allottee” and “real estate project” shall have 
the meanings respectively assigned to them in clauses (d) and (zn) of 
section 2 of the Real Estate (Regulation and Development) Act, 2016 
(16 of 2016);] 
6. It is thus evident that with the introduction of the explanation home 
buyers and allottees of real estate projects were included in the class of 
“ﬁ nancial creditors” - because ﬁ nancial debt is owed to them.  On a plain 
reading of Section 5 (8)(f) no distinction is per se made out between diﬀ erent 
classes of ﬁ nancial creditors for the purposes of drawing a resolution plan. 
Consequently, the reasoning of the Mumbai Bench of NCLT “Mr. Natwar 
Agrawal(HUF)” is correct in the opinion of this Court. 
7. So far as the argument of the resolution professional is concerned, 
Section 18 of the RERA, Act reads as follows:  
“18. Return of amount and compensation – (1) If the promoter 
fails to complete or is unable to give possession of an apartment, plot 
or building, -
(a) In accordance with the terms of the agreement for sale or, 
as the case may be, duly
completed by the date speciﬁ ed therein; or 
(b) due to discontinuance of his business as a developer on 
account of suspension or revocation of the registration under this Act 
or for any other reason, 
he shall be liable on demand to the allottees, in case the allottee 
wishes to withdraw from the project, without prejudice to any other 
remedy available, to return the amount received by him in respect of 
that apartment, plot, building, as the case may be, with interest at such
1155
rate as may be prescribed in this behalf including compensation in the 
manner as provided under this Act: 
Provided that where an allottee does not intend to withdraw from 
the project, he shall be paid, by the promoter, intererst for every month 
of delay, till the handing over of the possession, at such rate as may be 
prescribed.
(2) The promoter shall compensate the allottees in case of any 
loss cause to him due to defective title of the land, on which the project 
is being developed or has been developed, in the manner as provided 
under this Act, and the claim for compensation under this sub-section 
shall be not barred by limitation provided under any law for the time 
being in force.
(3) If the promoter fails to discharge any other obligations imposed 
on him under this Act or the rules or regulations made thereunder or in 
accordance with the terms and conditions of the agreement for sale, he 
shall be liable to pay such compensation to the allottees, in the manner 
as provided under this Act.”
8. The Resolution Professional’s view appears to be that once an allottee 
seeks remedies under RERA, and opts for return of money in terms of the 
order made in her favour, it is not open for her to be treated in the class of 
home buyer. This Court is unpersuaded by the submission. It is only home 
buyers that can approach and seek remedies under RERA – no others.  In such 
circumstances, to treat a particular segment of that class diﬀ erently for the 
purposes of
another enactment, on the ground that one or some of them had 
elected to take back the deposits together with such interest as ordered by the 
competent authority, would be highly inequitable. As held in Natwar Agarwal 
(HUF)(Supra) by the Mumbai Bench of National Company Law Tribunal the 
underlying claim of an aggrieved party is crystallized in the form of a Court 
order or decree. That does not alter or disturb the status of the concerned party 
- in the present case of allottees as ﬁ nancial creditors. Furthermore, Section 
238 of the IBC contains a non obstante clause which gives overriding eﬀ ect 
to its provisions. Consequently its provisions acquire primacy, and cannot be 
read as subordinate to the RERA Act.  In any case, the distinction made by the 
R.P. is artiﬁ cial; it amounts to “hyper-classiﬁ cation” and falls afoul of Article 
14. Such an interpretation cannot therefore, be countenanced.
VISHAL CHELANI & ORS. v. DEBASHIS NANDA
[S. RAVINDRA BHAT, J.]

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[2023] 13 S.C.R.
9.  In view of the foregoing reasons, the impugned order is hereby set 
aside; the appellants are declared as ﬁ nancial creditors within the meaning 
of Section 5(8)(f) (Explanation) and entitled to be treated as such along with 
other home buyers/ﬁ nancial creditors for the purposes of the resolution plan 
which is awaiting ﬁ nal decision before the adjudicating authority. 
The appeal is allowed in the above terms. 
Headnotes prepared by: 
Appeal allowed.
Nidhi Jain