Rohil had booked a flat from Swarnim Builders but the possession was not given to him on the due date. What shall be the status of Rohil in this case and whether he can initiate the insolvency proceedings against the Swa

Status of Rohil: In order to determine the status of Rohil, it is necessary to understand the definition of 'Financial Creditor' and 'Financial Debt' under the Insolvency and Bankruptcy Code, 2016 (IBC). Definition of Financial Creditor: In terms of Section 5(7) of the IBC, 2016, "Financial Creditor" means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. Definition of Financial Debt: In terms of Section 5(8)(f) "Financial Debt" means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing. Explanation (i) to Section 5(8) states that any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. Thus, Rohil shall be regarded as a Financial Creditor in terms of Section 5(7) read with Section 5(8)(f). Initiation of Corporate Insolvency Process by Financial Creditor: Section 7(1) of the Insolvency and Bankruptcy Code, 2016, provides that a financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government, may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. The second proviso to Section 7 of the Code provides that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed: Jointly by not less than one hundred of such allottees under the same real estate project; or Not less than 10% of the total number of such allottees under the same real estate project, whichever is less. Therefore, Rohil cannot file individually; he shall meet the statutory threshold with other allottees. Case Law: The Hon'ble Supreme Court in the matter of ' Pioneer Urban Land and Infrastructure Limited Vs. Union of India' [WP (C) No. 43 of 2019 with other appeals] SC order dt. 09.08.2019 ] upheld the constitutional validity of the amendment and stated that the home buyers are Financial Creditors. With this amendment, the Government has introduced the threshold for filing insolvency application by the home buyers against the builder companies. The allottees/home buyers were included in the main provision, i.e., section 5(8)(f) with effect from the inception of the Code. The Explanation was added in 2018 merely to clarify doubts that had arisen. The deeming fiction that is used by the Explanation is to put beyond doubt the fact that allottees are to be regarded as financial creditors within section 5(8)(f) of the Code. In real estate projects, money is raised from the allottee, against consideration for the time value of money. Thus, allottees are to be regarded as FCs. In the matter of Chitra Sharma and Ors. Vs. Union of India and Ors. [WP(Civil) 744 of 2017 and other appeals, the SC order dt. 09.08.2018] the Supreme Court opined that home buyers are brought within the purview of the financial creditors under the Code.