If CIRP under Insolvency & Bankruptcy Code, 2016 commences after issued sale certificate under SARFAESI Act, 2002, the rights of flat buyers cannot be affected by insolvency proceedings – Pankaj Majithia v. Honest Shelters Pvt. Ltd. and Ors. – Supreme Court

Hon’ble Supreme Court observes that a relevant aspect is that on 26.06.2019, a sale certificate was issued under the SARFAESI Act, 2002 in terms whereof while giving the description of the immovable property have been specifically excluded. Reasons for this is that qua these flats the work is assigned to respondent No. 1 and there are flat buyers who made payment in respect thereof. The orders of Real Estate Regulatory Authority (RERA) dated 20.03.2023 and 19.07.2023 required to complete the project and handover possession to the flat owners. The obligations of the flat buyers would be governed by their agreements. It is perceived that the impugned order would amount to revisiting this issue by the NCLT. The Hon’ble Court held that since the process by the NCLT under the IBC commences on 06.11.2019 and the sale certificate was issued on 26.06.2019, the rights of respondent No. 1 and the flat buyers cannot be affected by this process. Thus the NCLT is not to examine these aspects which apparently troubles the parties.

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