NCLT Admits Insolvency Petition Against Real Estate Developer for ₹6.76 Crore Default

The National Company Law Tribunal (NCLT) Chandigarh Bench has admitted an insolvency petition against Primezone Developers Private Limited, ruling that homebuyers qualify as financial creditors under the Insolvency and Bankruptcy Code, 2016 (IBC). The developer was found to have defaulted on claims totaling ₹6.76 crore.

The petition was jointly filed by 33 allottees led by Mr. Sandeep Turan under Section 7 of the IBC, seeking the initiation of the Corporate Insolvency Resolution Process (CIRP) against the real estate developer. The allottees had booked plots in the Prime City-Assandh project located in Sector-10, Assandh, Karnal, Haryana, and had paid substantial amounts as per the allotment letters issued by the company.

According to the applicants, the developer had assured them of possession within a reasonable period and the execution of sale deeds upon full payment. However, despite collecting the payments, the company failed to undertake meaningful development activities at the project site and did not hand over possession of the plots. The allottees reported that repeated requests and visits to the company yielded no response. They also mentioned that consumer complaints had been filed before the Haryana State Consumer Disputes Redressal Commission, and the project licence was eventually cancelled by the authorities due to non-development.

The corporate debtor argued that the applicants had not met the threshold requirement prescribed under Section 7 of the IBC. They claimed that project-related difficulties arose due to the attachment and subsequent auction of project land following proceedings under the Prevention of Money Laundering Act (PMLA).

The Tribunal, however, held that the petition satisfied the statutory threshold applicable to real estate allottees. The Bench, comprising Mr. Khetrabasi Biswal (Judicial Member) and Mr. Shishir Agarwal (Technical Member), observed that amounts raised from homebuyers have the commercial effect of borrowing and therefore constitute financial debt under Section 5(8)(f) of the IBC. The Bench further stated that the developer’s inability to complete the project due to attachment and auction proceedings could not absolve it of liability towards the homebuyers.

Finding the existence of debt and default, the Tribunal admitted Primezone Developers Private Limited into CIRP and appointed an Interim Resolution Professional to take charge of the process. This decision underscores the NCLT's commitment to protecting the rights of homebuyers and ensuring accountability in the real estate sector.

The case, Mr. Sandeep Turan vs M/s Primezone Developers Private Limited, was decided on 05 June 2026. The citation is 2026 TAXSCAN (NCLT) 168, Case Number CP (IB) 128/Chd/Hry/2022. The Bench was composed of Khetrabasi Biswal, Hon’ble Member (Judicial), and Shishir Agarwal, Member (Technical). The applicants were represented by Viren Sharma, Advocate, and Yash Srivastava, Advocate, while the respondent appeared ex-parte.