Jayparan ("Jay" in short), has paid a sum of ₹4 crore to RD Developers Private Limited (hereinafter referred as 'Corporate Debtor') who was engaged in real estate business. This sum of ₹4 crore was paid in 2010 as earnes

Jayparan ("Jay" in short), has paid a sum of ₹4 crore to RD Developers Private Limited (hereinafter referred as 'Corporate Debtor') who was engaged in real estate business. This sum of ₹4 crore was paid in 2010 as earnest money against advance sale consideration for booking of a flat. Since there was no progress in the said project until 2014, Jay sought refund of the earnest money following which the Corporate Debtor assured to return the same with interest @ 12% per annum. Since then, the sum of ₹4 crore was mutually treated as unsecured loan and reflected accordingly in the books of the account of the Corporate Debtor. Interest thereon was paid by the Corporate Debtor and TDS was also deducted thereon for which confirmation of books of accounts was periodically sought from Jay. Thus, it was contended that the Corporate Debtor by his own conduct changed the status of the home-buyer to a Financial Creditor. The Corporate Debtor paid regular interest till FY 2016-17. On the grounds of liquidity and financial crunch, he sought waiver of interest from Jay which request was, however declined. It is the contention of Mr. Jay that the Corporate Debtor thereafter, defaulted in making interest payment since 1st October, 2017 and continued to default from FY 2017-18 until FY 2020-21 except for part repayment in 2018. It is further submitted that on the demise of Mr. Jay during October 2018, the loan amount was transferred to the name of his wife, Kushma Jayparan which stands confirmed from the confirmation of account for FY 2019-20 signed by the Directors of the Corporate Debtor. On account of non-payment of debt, a letter dated 1st February, 2021 was sent by Kushma Jayparan to the Corporate Debtor demanding a sum of ₹6.20 crores which included principal amount of ₹4.09 crores and ₹2.11 crores as interest. Since the amount remained outstanding, on behalf of Jay, his wife filed an application under Section 7 of the IBC on 6th October, 2021 for initiating a Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for the default committed. The learned Counsel of the Corporate Debtor contended that there was no agreement between Jay and the Corporate Debtor with respect to the amount advanced by him and further, the amount paid by Jay is as an Advance amount for buying a flat under development of the Corporate Debtor. Hence, Jay is only a home buyer and not a Financial Creditor of unsecured loans. It is also the contention of the Corporate Debtor that the investment was made by the Jay to receive returns on investment from the Corporate Debtor. Hence, the sum advanced was in the nature of speculative investment and cannot be treated as a financial debt. The Adjudicating Authority viewed that as no time period was stipulated in the demand notice, it may be held that no default had occurred and also this date fell in the prohibited period under Section 10A of the IBC, 2016. Thus, the Adjudicating Authority held that in both these circumstances, Section 7 application was non-maintainable. Aggrieved with the findings of the Adjudicating Authority, the wife of Jay preferred an appeal before the National Company Law Appellate Tribunal. Referring to the relevant provisions of IBC, 2016 vis-à-vis 'financial debt', analyse : (i) Whether home buyers are a separate class of financial creditors unlike other unsecured financial creditors ? (ii) Also examine whether 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 ? (iii) What is the requisite minimum threshold of allottees eligible to initiate insolvency proceedings against defaulting builders/real estate companies ?