NCLT Mumbai: Buyers of Industrial Units Not Homebuyers, No Financial Creditor Status Under IBC

NCLT Mumbai: Buyers of Industrial Units Not Homebuyers, No Financial Creditor Status Under IBC

Introduction

This case concerns whether a purchaser of an industrial unit in an integrated industrial project can claim the status of a “financial creditor” under Section 5(8)(f) of the Insolvency and Bankruptcy Code (IBC). The National Company Law Tribunal (NCLT), Mumbai, held that the deeming fiction that recognises homebuyers as financial creditors applies strictly to residential allottees, not to investors in commercial or industrial premises. The tribunal reaffirmed that protections available to homebuyers cannot be extended to purchasers of industrial units.

Factual background

Harisharan Hi-Tech Industries purchased an industrial gala in the Renaissance Industrial Smart City project through a registered agreement for sale and an MoU, paying over ₹40 lakh including GST. The project was classified as an Integrated Industrial Area under the Maharashtra Industrial Development Act. When insolvency proceedings commenced, the Interim Resolution Professional (IRP) admitted the monetary claim but categorised the applicant under “other creditors,” not as a financial creditor. The applicant challenged the categorisation and sought recognition as a financial creditor under Section 5(8)(f).

Procedural background

The applicant filed an IA arguing that the deeming fiction applicable to real estate allottees under Section 5(8)(f) should cover all unit purchasers irrespective of whether the premises are residential or commercial. The IRP opposed the plea, emphasising that the project was not a residential real estate project under RERA and that the applicant’s agreement reflected investment intent through an assured return mechanism. The matter was heard by the Mumbai Bench comprising Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati.

Issues

1. Whether purchasers of commercial or industrial units can be treated as “allottees” under Section 5(8)(f) of the IBC.

2. Whether an investor purchasing an industrial unit for commercial gain can claim financial creditor status equivalent to homebuyers.

3. Whether the deeming fiction created by the IBC for homebuyers extends to industrial premises.

Contentions of the parties

Applicant’s submissions: The applicant argued that Section 5(8)(f) does not distinguish between types of real estate units and therefore applies to industrial premises as well. He relied on judicial decisions implying that industrial units may fall under RERA. It was further argued that payment of consideration and allotment of a unit gives rise to a financial debt regardless of intended use.

IRP’s submissions: The IRP argued that the project was an Integrated Industrial Area, not a real estate project under RERA, and thus industrial unit purchasers cannot be treated as residential allottees. It was highlighted that the applicant entered the transaction for investment purposes, as evidenced by an assured return clause in the MoU. The IRP submitted that Section 5(8)(f) applies only to homebuyers seeking residential use, in line with the legislative intent to protect housing consumers.

Reasoning and analysis

The coram of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati held that the deeming fiction under Section 5(8)(f) is strictly limited to allottees of a “real estate project” as defined under RERA, which contemplates development of apartments or plots intended for habitation. It emphasised that the legislative intent behind recognising homebuyers as financial creditors was to safeguard individuals seeking shelter — a constitutionally protected facet of Article 21. Purchasers of commercial or industrial units, particularly those who enter into assured-return arrangements, operate as investors and fall outside this protective framework. The tribunal found that the applicant’s reliance on Mansi Brar was misplaced, as the Supreme Court did not expand the definition of homebuyer to include industrial or commercial investors. Given that the applicant acted as an investor in an industrial asset, the essential ingredients of financial debt under Section 5(8)(f) were not satisfied.

Implications

The ruling reinforces that only genuine residential allottees are covered by the deeming fiction under the IBC, preventing commercial investors from availing the protections meant for homebuyers. It also clarifies that industrial or commercial projects do not fall within the ambit of RERA-based protections unless specifically intended for residential use. This ensures that the IBC’s framework for recognising financial creditors is not diluted by extending preferential treatment to commercial investors, maintaining the legislative balance between consumer protection and insolvency discipline.

In this case the petitioner was represented by Mr. Harshul Shah, Advocate. Meanwhile the respondent was represented by Mr. Kunal Kanungo, Advocate.