In 2016, the legislature responded to the real estate sector’s crisis of confidence with two major reforms: the Real Estate (Regulation and Development) Act (RERA) and the Insolvency and Bankruptcy Code (IBC). Both sought to stabilise a collapsing system, but with distinct purposes.
RERA was crafted as a homebuyer protection statute: mandating registration, disclosure and timely completion of projects to protect individuals who had invested their life savings in the dream of home ownership.
The IBC, conversely, was a macroeconomic reform, designed to revive the credit ecosystem by ensuring an efficient mechanism for corporate insolvency. It viewed companies as economic entities whose financial distress could ripple through the wider economy.
While both laws were conceived independently, their operation within the same ecosystem has inevitably generated jurisdictional friction. A delayed housing project can simultaneously trigger actions under both RERA and IBC, creating overlapping proceedings and encouraging what courts term forum shopping - where parties pursue the forum that offers a quicker or more favourable outcome.
This tension became most visible in 2019, when the Supreme Court in Pioneer Urban Land and Infrastructure Ltd v. Union of India upheld the constitutional validity of the 2018 amendment to the IBC recognising homebuyers as financial creditors. This landmark decision empowered homebuyers to initiate corporate insolvency against defaulting developers, but it also blurred the line between genuine homebuyers and speculative investors who entered into buy-back or assured-return arrangements purely for profit.
It is in this context that the Supreme Court’s recent ruling in Mansi Brar Fernandes v. Shubha Sharma & Anr (2025) assumes significance. The judgment represents a doctrinal re-assessment, reaffirming that RERA must be the primary forum for homebuyer grievances, while IBC remains a remedy of last resort - reserved for genuine cases of insolvency. Mansi Brar seeks to restore the balance in India’s dual real-estate regulatory framework.
2019: Pioneer Urban Land and Infrastructure Ltd. v. Union of India
A watershed moment, Pioneer Urban upheld the 2018 amendment classifying homebuyers as financial creditors under the IBC. This allowed allottees in real-estate projects to initiate insolvency proceedings against developers, intended to empower consumers, not to turn IBC into a recovery tool.
In practice, however, the ruling opened the floodgates: speculative investors began invoking insolvency to protect or recover their monetary interests, stretching the Code far beyond its intended purpose of corporate resolution.
2021: Manish Kumar v. Union of India
To curb misuse, legislature introduced a threshold requirement via the 2020 IBC amendment: a minimum of 100 homebuyers or 10% of allottees (whichever is less) from the same project must jointly file for insolvency. The amendment’s constitutionality was upheld in Manish Kumar, with the Court recognising that it struck a balance, protecting genuine allottees while deterring frivolous or coercive filings.
Even before Mansi Brar, the NCLAT began refining this intersection. In Umang Realtech Pvt Ltd, Navin Raheja and Kailash Nath Associates, the Tribunal experimented with project-wise insolvency, treating each real-estate project as a separate economic unit. This approach sought to protect ongoing developments and prioritise completion over liquidation.
Simultaneously, the NCLAT discouraged coercive insolvency petitions by investors holding assured-return contracts, signalling an emerging understanding that not every default should trigger a full corporate insolvency resolution process (CIRP).
The Supreme Court’s decision in Mansi Brar marks a course correction in the uneasy relationship between RERA and IBC. The Court confronted the growing misuse of insolvency proceedings by individuals who had entered into speculative real-estate arrangements.
At its core, the ruling clarifies that RERA is the primary mechanism for addressing homebuyer grievances, while IBC is subsidiary—to be invoked only as a last resort when genuine corporate insolvency exists. The Court underscored that the IBC’s architecture is designed for resolution and continuity of business, not for individual debt recovery.
Perhaps Mansi Brar’s most consequential contribution is the introduction of the “speculative investor” test. The Court held that agreements containing buy-back clauses, fixed returns, or assured appreciation guarantees signal an investment motive, not an intent to acquire possession.
Such investors cannot trigger CIRP under Section 7 of the IBC; their remedies lie within RERA or consumer fora. Allowing speculative investors to invoke insolvency, the Court warned, would distort the Code’s purpose and crowd out genuine insolvency cases.
The shift from Pioneer Urban to Mansi Brar Fernandes represents an evolution of jurisprudence rather than a reversal. While Pioneer Urban had broadened access to the IBC by recognising homebuyers as financial creditors, it had also cautioned that insolvency should not become a recovery weapon. Mansi Brar operationalises that caution: it introduces qualitative filters distinguishing genuine homebuyers from speculative investors.
Thus, Mansi Brar refines rather than contradicts Pioneer Urban. Homebuyers retain their status as financial creditors, but only those who can demonstrate a bona fide intent to obtain possession, not a return on investment, are eligible to invoke the IBC.
The judgment re-establishes RERA’s primacy, reminding stakeholders that disputes over delay, refund, or possession must first be addressed before the sectoral regulator. Insolvency, in contrast, must remain a tool for resolving genuine financial distress, not an avenue for leverage.
For tribunals, Mansi Brar introduces a new gatekeeping duty: pre-admission scrutiny of agreements. Clauses offering fixed returns, buy-backs, or quick exits will now indicate speculation.
The IBC resolves insolvency at the company level, whereas RERA regulates individual projects. This structural difference has long caused friction.
When a developer enters CIRP, all its projects whether viable or otherwise are swept into the process, jeopardising even solvent developments and trapping homebuyers who were nearing possession. The lack of project-wise segregation of assets defeats both RERA’s consumer-protection purpose and IBC’s goal of value preservation.
Mansi Brar implicitly recognises this, emphasising that insolvency in real estate should aim for completion and possession, not premature liquidation.
Tribunals such as in Umang Realtech and Navin Raheja have already experimented with ring-fencing projects, treating them as independent units. Mansi Brar strengthens this jurisprudence, acknowledging that housing disputes require a framework distinct from conventional commercial insolvencies.
Homebuyers must now demonstrate genuine residential intent. Contracts promising assured returns or buy-backs will be treated as investment instruments outside IBC’s scope.
Developers gain relief from coercive insolvency petitions, but face stricter compliance and scrutiny under RERA.
Insolvency professionals & NCLTs must conduct pre-admission due diligence, examining agreements to identify speculative elements before admitting a Section 7 petition.
Regulators & policymakers need to build procedural coordination between RERA authorities and NCLTs to prevent parallel proceedings.
This emerging equilibrium shifts pressure from insolvency tribunals back to sectoral accountability under RERA, where it arguably belongs.
Mansi Brar opens the door to deeper reform. India’s real-estate regulation can no longer function through disconnected silos; RERA and IBC must communicate.
Inter-forum coordination: Establish mandatory data-sharing between RERA authorities and NCLTs before CIRP admission.
Codify the “speculative investor” test: Legislative recognition would provide uniform standards for assessing intent.
Project-specific insolvency: Statutory recognition of project-wise resolution would protect solvent projects while enabling efficient revival of distressed ones.
Such reforms would align the law with Mansi Brar’s guiding principle -completion over liquidation - and ensure that the regulatory architecture serves both economic efficiency and consumer protection.
Mansi Brar signals a mature phase in the Court’s approach to real estate regulation, one that discourages misuse, prioritises completion and possession, and nudges lawmakers toward a coherent, collaborative framework for the sector’s future.
Deep Dighe is an advocate practising before the Bombay High Court and Adhya Pandey is a third year student at MNLU Mumbai.