NCLT Mumbai rejects homebuyer claims in E-Commerce Magnum CIRP, holds third-party payments do not create ‘financial debt’

Background

Allotment letters without disbursement or RERA registration insufficient to confer creditor status, Tribunal rules; The Mumbai Bench-II of the National Company Law Tribunal has dismissed a batch of six interlocutory applications filed by alleged homebuyers in the corporate insolvency resolution process (CIRP) of E‑Commerce Magnum Solution Limited, holding that the applicants failed to establish themselves as financial creditors or allottees under the Insolvency and Bankruptcy Code, 2016.

The applications were filed under Section 60(5) of the Code seeking directions to the Resolution Professional to admit their claims and restrain the Committee of Creditors from voting on any resolution plan. The CIRP had been initiated on a petition filed by J.C. Flowers Asset Reconstruction Private Limited. The applicants claimed allotment of apartments in a proposed real estate project named “Marquis” and asserted that ₹48 lakh per applicant had been paid towards booking of flats. However, it was an admitted position that the alleged payments were made by a third party and not by the applicants themselves.

Findings and Order

Rejecting the claims, the Bench comprising Judicial Member Ashish Kalia and Technical Member Sanjiv Dutt held that disbursement is a sine qua non for a financial debt under Section 5(8) of the Code. In the absence of any payment by the applicants to the corporate debtor, the essential ingredient of a financial debt was not satisfied. Mere issuance of an allotment letter, without corresponding disbursement, could not create creditor rights. The Tribunal further observed that the so-called allotment letters reflected an investment arrangement rather than a genuine homebuyer transaction. No specific flats were identified, no agreements for sale were executed, and the project itself was not registered under RERA making any alleged allotment legally untenable. Relying on Supreme Court precedents including Pioneer Urban, Anuj Jain and Phoenix ARC, the Bench reiterated that the real nature of the transaction must be examined and that protections available to homebuyers under the Code apply only where funds are actually raised from them with the commercial effect of borrowing. Holding that the Resolution Professional had acted within his statutory duty of claim verification, the Tribunal dismissed all six applications as devoid of merit.