NCLT Allahabad Upholds Flat Possession for Renaissance Realty but Orders ₹1 Crore RERA Recovery to Be Restored to JAL CIRP Estate

NCLT Allahabad Upholds Flat Possession for Renaissance Realty but Orders ₹1 Crore RERA Recovery to Be Restored to JAL CIRP Estate

Introduction

The Allahabad Bench of the National Company Law Tribunal (NCLT) has confirmed that Renaissance Realty has already received possession of its flat in Jaypee Greens Kalypso Court, while holding that the ₹1 crore recovered under UP RERA proceedings must be returned to the insolvency estate of Jaiprakash Associates Ltd. (JAL). The Tribunal held that permitting a single allottee to retain such recovery would amount to preferential recovery inconsistent with the collective insolvency mechanism under the Insolvency and Bankruptcy Code, 2016.

Factual Background

The dispute concerns Jaiprakash Associates Ltd. (JAL), which launched the Jaypee Greens Kalypso Court group housing project. Renaissance Realty booked Unit No. KLP0082402 in Phase-II and paid more than ₹4.84 crore towards the apartment. Under the builder-buyer arrangement, possession was to be handed over by December 2015, but the developer failed to do so.

Aggrieved by the delay, Renaissance Realty approached UP RERA, which by order dated 6 October 2020 directed JAL to hand over possession by September 2021 and pay delayed interest at MCLR + 1%. On JAL’s failure to comply, UP RERA issued a recovery certificate dated 1 March 2024. Since the District Magistrate delayed execution of the certificate, the allottee approached the Allahabad High Court in writ jurisdiction, pursuant to which ₹1 crore was recovered from JAL and transferred to the applicant before the commencement of CIRP.

Subsequently, JAL entered CIRP in June 2024, where Renaissance Realty filed a claim of ₹8.57 crore as a financial creditor, though the Resolution Professional admitted the claim only to the extent of ₹68.25 lakh.

Procedural Background

The application was filed by Renaissance Realty against the Resolution Professional Bhuvan Madan before the Allahabad Bench comprising Judicial Member Praveen Gupta and Technical Member Ashish Verma.

During the pendency of the application, the Tribunal in December 2025 directed the applicant to deposit ₹1 crore with the Tribunal registry, while recording the RP’s undertaking that possession would be handed over upon such deposit. The applicant complied, and thereafter possession of the flat was formally delivered.

The only surviving issue before the Tribunal was whether Renaissance Realty could continue to retain the ₹1 crore earlier recovered through the RERA recovery certificate.

Issues

1. Whether the applicant, having obtained possession, could retain the ₹1 crore recovered under RERA proceedings.

2. Whether the amount recovered prior to CIRP must revert to the insolvency estate of JAL under the IBC.

3. Whether allowing such retention would amount to preferential recovery by one allottee outside the collective insolvency framework.

Contentions of Parties

The applicant, Renaissance Realty, submitted that it had complied with all payment demands made by the RP, including deposit of the amount as directed by the Tribunal, and had been unfairly denied possession despite other homebuyers in the same project receiving registry and possession. It denied any allegation of fraud in receipt of the ₹1 crore, emphasising that the amount had been recovered and transferred pursuant to RERA and High Court directions before commencement of CIRP.

The RP, on behalf of Jaiprakash Associates Ltd., contended that the amount recovered under the RERA certificate formed part of the corporate debtor’s assets and, by virtue of Sections 14 and 18 of the IBC, must be restored to the insolvency estate. It was further argued that once CIRP commenced, no single allottee could be permitted to enjoy a preferential recovery outside the waterfall and collective resolution process.

Reasoning and Analysis

The Tribunal first noted that the primary relief of possession had already been satisfied, as the flat had been handed over after compliance with the interim deposit order. Therefore, the only question that survived was the treatment of the ₹1 crore recovered through the RERA process.

The Bench held that permitting the applicant to retain this amount would effectively enable one homebuyer to secure a better recovery than similarly placed allottees, thereby defeating the collective nature of insolvency proceedings under the Code. The IBC contemplates equal treatment of creditors within their class and does not permit one allottee to circumvent the process through parallel recovery mechanisms.

The Tribunal emphasised that since the applicant’s claim for delayed interest had already been admitted by the RP to the extent of ₹68.25 lakh, its rights would be appropriately dealt with under the approved resolution plan and insolvency process. Retention of the ₹1 crore, over and above such admitted claim, would undermine the insolvency framework and result in preferential recovery. Accordingly, the Bench concluded that the ₹1 crore, along with accrued interest, must be released to the RP so as to become part of JAL’s insolvency estate.

Decision

The NCLT Allahabad directed that the ₹1 crore deposited with the Tribunal registry, along with accrued interest, be released to the Resolution Professional of Jaiprakash Associates Ltd., to form part of the insolvency estate. The Tribunal also recorded that Renaissance Realty had already received possession of the flat, and its admitted claim of ₹68.25 lakh would remain subject to the resolution plan. The application was accordingly disposed of.

In this case the appellant was represented by Advocate Yash Tandon. Meanwhile the respondent was represented by Advocates Dr Farrukh Khan, Dinkar Tiwari and Khushboo Sai Khurana.