Writ Jurisdiction under Article 226 Cannot Be Invoked by Homebuyers Once Claims Are Submitted in Ongoing CIRP Proceedings under the IBC

The High Court held that writ jurisdiction under Article 226 of the Constitution cannot be invoked by homebuyers once their claims have been submitted in the ongoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.

The Allahabad High Court Division Bench comprising Justice Siddhartha Varma and Justice (Dr.) Yogendra Kumar Srivastava, while adjudicating multiple writ petitions, held that once homebuyers have submitted their claims in the ongoing Corporate Insolvency Resolution Process (CIRP), the High Court cannot exercise its writ jurisdiction under Article 226 of the Constitution to interfere with proceedings under the Insolvency and Bankruptcy Code, 2016, particularly when the IBC constitutes a complete code providing sufficient statutory remedies and appellate mechanisms.

The High Court heard writ petitions filed by several homebuyers who were allotted flats in the ‘Knights Court’ project by Jaiprakash Associates Ltd. The petitioners had initially approached the Uttar Pradesh Real Estate Regulatory Authority (UPRERA), which passed orders in 2019 and 2021 directing the builder to either deliver possession within a specified period or refund the deposited amounts. Due to non-compliance, recovery certificates were issued. However, subsequent agreements between the builder and the homebuyers, including a rehabilitation order under Section 8 of the RERA Act, led to the suspension of these recovery proceedings.

The court noted that insolvency proceedings had been initiated against the builder, with a Resolution Professional (RP) appointed and the homebuyers’ claims submitted under the IBC framework. The petitioners challenged specific directions for refund under the earlier UPRERA orders, asserting that refunds were never sought by them and that their current demand was for possession of their flats. They also challenged the decisions of the Committee of Creditors (CoC) for not prioritizing possession in the resolution process.

After examining the facts, the High Court held that the challenge to the refund direction in the UPRERA orders was an afterthought and not maintainable via writ petition, especially since the orders were appealable under the RERA Act. The court further held that the CoC meeting minutes merely reflected ongoing deliberations, and no final resolution plan had yet been approved. Therefore, judicial intervention at this premature stage was unwarranted.

Referring to recent Supreme Court decisions, the High Court reaffirmed that the Insolvency and Bankruptcy Code, 2016, is a self-contained code and any unwarranted interference under Article 226 of the Constitution could obstruct the CIRP. Given that the petitioners had already submitted claims in the ongoing insolvency process, the High Court declined to interfere and disposed of the writ petitions, leaving it open to the petitioners to pursue appropriate remedies available under law.

Mr. Ravi Kant and Ms. Vatsala, Advocates, represented the Appellants.

Mr. Ankit Prakash, Mr. Ashok Kumar Srivastava, C.S.C. and Mr. Mohd. Afzal, Advocates, appeared for the Respondents.

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