Buyers can seek a refund from a real estate firm that is undergoing insolvency.

The National Company Law Appellate Tribunal (NCLAT) ruled that insolvency proceedings initiated by a flat buyer or financial institution would be pursued only with respect to the project in dispute and would not impact any other projects of developers.

The whole insolvency procedure started at the behest of either a flat buyer or a bank or any other financial institution is restricted to the project only, said an NCLAT bench led by Chairman Justice S J Mukhopadhaya.

However, the appellate tribunal recommended that the reverse corporate insolvency process should also take place in such situations.

“In CIRP, if allottees or financial institutions, banks or operational creditors in a single project initiated in CIRP are limited to a particular project; in other places where the separate plans have been approved by different authorities it may not affect any other project of the same real estate company,” the NCLAT stated in its order. The order came through a petition filed by allottees group – Flat Buyers Association Winter Hills-77, Gurgaon.

In case the flat owners are looking for a refund for the specific project of the insolvency firm, they are free to sign an agreement, either with a temporary resolution specialist or the promoter to find a new buyer and get the money back if and when the flat is sold, NCLAT said.

“While we find it very difficult to follow the process, because a corporate insolvency resolution process usually follows, in the interest of the allottees and of the survival of the real estate companies a reverse corporate insolvency resolution process can be pursued and projects which provide employment to a vast population of unorganized workmen can be accomplished,” said the NCLAT.