Top court: rwas can't intervene in developer insolvency cases
New Delhi, Jan. 16 -- A society or resident welfare association (RWA) has no legal right to intervene at the stage where a financial creditor seeks to trigger insolvency proceedings against a real estate developer for defaulting on its loan obligations, the Supreme Court ruled on Thursday.
A bench of justices JB Pardiwala and R Mahadevan court held that since such bodies are neither lenders themselves nor statutorily recognised representatives of homebuyers under the insolvency law, they are not entitled to be heard when a creditor moves to initiate the corporate insolvency resolution process.
The court clarified that proceedings under Section 7 of IBC - at the stage of admission of a corporate debtor into the Corporate Insolvency Resolution Process (CIRP), are essentially bipartite, involving only the financial creditor and the corporate debtor. As a result, third parties such as societies or RWAs are not entitled to be heard, either before the adjudicating authority or at the appellate stage....
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