IndiaBuilder went bankrupt before completing my flat. What are my rights?
If your builder goes bankrupt before completing your flat, you are a financial creditor under the IBC and can file a claim with the resolution professional. You may also approach RERA for refunds or completion of the project.
What the Law Says
The Insolvency and Bankruptcy Code (IBC), 2016, and the Real Estate (Regulation and Development) Act (RERA), 2016, together protect homebuyers when builders default or become insolvent. Under IBC, homebuyers are treated as financial creditors, giving them standing to initiate or participate in insolvency proceedings. RERA mandates timely project completion and provides statutory remedies for delays or abandonment.
Under the IBC, a homebuyer who has paid money for an under-construction flat is considered a 'financial creditor' because the amount paid is deemed a 'financial debt' — i.e., 'a debt along with interest, if any, which is disbursed against the consideration for the time value of money'. This status allows you to file a claim with the resolution professional during corporate insolvency resolution process (CIRP).
RERA requires every real estate project (above 500 sq.m. or 8 apartments) to be registered. If the builder fails to complete the project on time, RERA authorities can order a refund with interest, compensation, or even direct project completion through a competent agency.
The Supreme Court clarified in Pioneer Urban Land and Infrastructure Ltd. v. Union of India (2019) that homebuyers are financial creditors under IBC — ending earlier ambiguity and strengthening their rights in insolvency cases.
Statutory Textfinancial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money
— Insolvency and Bankruptcy Code, 2016, s. 5(8)(f)
Statutory TextEvery promoter shall, within such time, as may be prescribed, complete the project within the period declared by him in the affidavit filed under clause (e) and shall not make any false statement in such affidavit
— Real Estate (Regulation and Development) Act, 2016, s. 3(1)
What Courts Have Said
Indian courts have consistently strengthened homebuyers’ rights in insolvency and regulatory contexts — especially after landmark rulings interpreting IBC and RERA in tandem.
Held that homebuyers are financial creditors under IBC, affirming their right to be represented in the Committee of Creditors and to vote on resolution plans.
Upheld homebuyers’ priority over secured financial creditors in certain circumstances and directed that their claims be protected during resolution.
What to Do
Immediately file a claim with the Resolution Professional (RP) appointed in the builder’s CIRP — submit proof of payment, allotment letter, and agreement.
Simultaneously, file a complaint with your State RERA Authority seeking refund with interest (up to 10% p.a.) or direction for project completion.
Join or form a homebuyers’ association to collectively assert rights — group applications carry more weight before NCLT and RERA.
Monitor the CIRP timeline: resolution must be completed within 180 days (extendable by 90 days), and ensure your claim is admitted and voted upon.
If the resolution plan ignores homebuyers’ interests, challenge it before the NCLT or appellate tribunal (NCLAT).
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.