Can Homebuyers Challenge a CoC-Approved Resolution Plan? Limits of Appellate Review Under the IBC

Homebuyers under IBC are treated as financial creditors, but they form a class and vote through an authorised representative. The representative votes according to the decision of the class. A homebuyer who disagrees with the outcome may seek to challenge the resolution plan before the tribunal. The National Company Law Appellate Tribunal (“NCLAT”) addressed the limits of such a challenge in an appeal arising from the insolvency of a real estate company.

How Do Homebuyers Vote Under the IBC?

Under the Explanation to Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 (“IBC”), an amount raised from a homebuyer (allottee) under a real estate project is deemed to have the commercial effect of a borrowing, so allottees are financial creditors. Because they are numerous, Section 21(6A)(b) requires creditors in a class to be represented by an authorised representative, and Section 25A sets out that representative’s rights and duties, including voting in accordance with the decision of the class arrived at by the prescribed majority.

The consequence is structural: an individual allottee’s preference does not translate into an individual vote on the plan.

The Decision

In Girish Nalavade v. Bhrugesh Amin & Ors. (NCLAT, New Delhi, 19 March 2024), a group of homebuyers in the insolvency of a textile company’s real estate project challenged the approval of a resolution plan, seeking either rejection of the plan or fresh bidding.

The Appellate Tribunal dismissed the appeal. Its reasoning, as reported, includes:

• once the committee of creditors (“CoC”) has approved a plan by the requisite majority, and the plan is in accordance with applicable law, and nothing shows material irregularity by the resolution professional in the conduct of the CIRP, the decision is not open to judicial review on merits; and
• the Code does not give dissatisfied individual homebuyers in a minority a route to override the commercial wisdom of the majority in the CoC.

The Tribunal also recorded that it was not disputed that the homebuyers, including the appellant, had accepted the offer of the principal amount from the successful resolution applicant.

The Statutory Limits on Appeal

Section 61(3) restricts appeals against an order approving a resolution plan to specified grounds, namely that the plan contravenes the law in force, that there has been material irregularity in the exercise of powers by the resolution professional, that debts owed to operational creditors have not been provided for as required, that insolvency resolution process costs have not been provided for in priority, or that the plan does not comply with other criteria specified by the Board.

The Supreme Court has consistently treated the CoC’s commercial decision as non-justiciable on merits: see K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150, and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531. What remains open is legality and process.

When Can a Resolution Plan Be Challenged?

Deference is not absolute. Courts have intervened where the process was defective or the applicant ineligible:

• In M.K. Rajagopalan v. Dr. Periasamy Palani Gounder, (2024) 1 SCC 42, the Supreme Court upheld rejection of a plan because the applicant was ineligible and because the revised plan had not been placed before the CoC.
• In Greater Noida Industrial Development Authority v. Prabhjit Singh Soni, 2024 INSC 102, the Supreme Court held that the form of a claim is directory, that a claim supported by proof must be considered, and that the NCLT has inherent power to recall an order approving a plan in appropriate cases.

So the question is not whether a creditor is dissatisfied with the amount, but whether the plan or the process breaches the Code.

Changes Since 26 May 2026

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 strengthens the record on which such challenges are decided:

• Section 30(4) requires the CoC to record reasons for approving a plan, which gives an appellate tribunal something concrete to test against Section 61(3).
• Section 30(2)(ba) fixes the minimum payable to financial creditors who do not vote in favour at the lower of their liquidation entitlement or a Section 53(1)-based share of plan value, and declares such distribution fair and equitable. Allottees in a class who dissent fall within this provision, subject to Explanation II, which excludes CIRPs where the CoC had approved a plan, or liquidation had been ordered or intimated, before 26 May 2026.
• Regulatory changes of February 2025 for real estate cases, as reported, allow handover of possession to allottees during the process with CoC approval, and provide for facilitators where a class is very large.
• Section 61(6) requires the NCLAT to dispose of appeals within three months.

Practical Guidance for Allottees

• Engage with the authorised representative and the class: the vote is exercised collectively, and the class decision is what binds.
• Frame objections in terms of Section 61(3): contravention of law, material irregularity, or failure to provide for specified payments.
• Raise objections before the Adjudicating Authority at the approval stage. Once a plan is approved and implemented, Section 31(6) extinguishes claims that were not provided for.
• Where possession rather than money is the objective, the 2025 regulatory changes make it worth pressing the resolution professional and the CoC on handover during the process.

FAQs

Can an individual homebuyer challenge a resolution plan under the IBC?
Yes, homebuyer can challenge a resolution plan under the IBC but only on the limited grounds available under Section 61(3), not merely because the homebuyer disagrees with the CoC’s commercial decision.

How do homebuyers vote in CIRP?
Homebuyers vote as a class through an authorised representative, who votes according to the class decision.

Can a minority homebuyer override the class decision?
Generally, an individual homebuyer cannot override the collective decision of the class or the CoC’s commercial wisdom.

When can a resolution plan be challenged?
A challenge may succeed where there is a statutory violation, material irregularity, or another ground specifically recognised under Section 61(3).

Legal Information Disclaimer

This article provides general information about Indian law as it stood on 16 September 2026. It is not legal advice, and reading it does not create an advocate–client relationship. Statutes, rules and judicial interpretations change, and their application depends on the facts of each matter. Readers should consult the current official text of the laws and judgments cited and should not act on this information without advice specific to their circumstances. This article is published for legal awareness and education and is not intended to advertise or solicit professional work.

Sources / Authorities

1. Insolvency and Bankruptcy Code, 2016 — Sections 5(8)(f), 21(6A), 25A, 30, 31, 61 (as amended) — IBBI – Legal Framework
2. Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) — Gazette text (IBBI); Notification S.O. 2625(E) dated 22 May 2026 — IBBI
3. Girish Nalavade v. Bhrugesh Amin & Ors., NCLAT, New Delhi, 19 March 2024 — Indian Kanoon
4. K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150, Supreme Court of India
5. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, Supreme Court of India
6. M.K. Rajagopalan v. Dr. Periasamy Palani Gounder, (2024) 1 SCC 42, Supreme Court of India, 3 May 2023
7. Greater Noida Industrial Development Authority v. Prabhjit Singh Soni, 2024 INSC 102, Supreme Court of India, 12 February 2024 — Indian Kanoon
8. IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, as amended in February 2025 — IBBI – Regulations