Over the past few years, one pattern has become very clear in real estate disputes—winning a case is no longer the hard part. Enforcing it is.
Most homebuyers today are aware of RERA. They know that delays in possession or failure to refund can be challenged, typically by filing a complaint under Section 31 of RERA, and in many cases, authorities do pass well-reasoned orders in favour of buyers. On paper, the system works. But in practice, the journey rarely ends with the order.
What follows is where the real complexity begins.
The Illusion of Final Relief
A RERA order, especially one granting refund with interest, feels like closure. But the enforcement mechanism tells a different story.
Unlike a civil court decree, execution under RERA depends on administrative recovery. The order is converted into a recovery certificate and sent to the local authorities or District Magistrate. From there, it enters a process similar to recovery of government dues under Section 40 of RERA.
In theory, this is powerful—attachment, auction, coercive recovery. In reality, it often moves slowly. Multiple follow-ups, procedural delays, and resistance from developers are common. Many buyers find themselves stuck in a second phase of litigation, just to realise the benefit of the order they already won.
The Shift to Insolvency: A Strategic Move
It is at this stage that many buyers begin to consider insolvency proceedings. Not necessarily because they want the builder to be liquidated, but because insolvency changes the dynamics completely.
The moment a case is admitted before the insolvency tribunal, control shifts away from the builder. An independent (IRP) interim resolution professional steps in, financial records are scrutinised, and all creditors—including homebuyers—are brought into a structured process as financial creditors or (CoC) committee of creditors.
From a pressure standpoint, this is often far more effective than execution proceedings. Builders who resist RERA enforcement sometimes become far more responsive when faced with the risk of losing control over the company.
When and How Buyers Can Approach Insolvency
Buyers generally cannot initiate insolvency alone. A minimum of 100 buyers or 10% of total allottees (whichever is lower) is required, along with a clear default such as delay or non-refund.
A joint application is then filed under Section 7 IBC with basic proof of payment and default. Admission is the real turning point—not filing. Everything changes only after the case is formally admitted.
The Legal Turning Point: Moratorium
However, insolvency comes with a consequence that many buyers do not anticipate.
Once the tribunal admits the case, a moratorium is imposed under Section 14 of IBC. This is not just a procedural pause—it is a complete legal freeze on recovery actions.
Execution of RERA orders stops. Recovery certificates become unenforceable for the time being. Even ongoing proceedings lose their teeth.
For a buyer who has already spent time and effort obtaining a favourable RERA order, this can feel like going back to square one.
Overriding Effect of Insolvency Law
Another important aspect is that insolvency law has an overriding effect under Section 238 of IBC 2016.
This means that in case of any conflict between RERA enforcement and insolvency proceedings, the insolvency framework prevails—especially once the moratorium is in place.
From Individual Rights to Collective Process
The nature of the claim also changes at this point.
Before insolvency, a buyer acts independently—filing a complaint, securing an order, and pursuing execution. After admission, the buyer becomes part of a larger pool of creditors.
Decisions are no longer individual. They are taken collectively through the committee of creditors. The outcome depends on what is feasible for the project as a whole, not what is ideal for any single buyer.
The Practical Reality
From experience, most disputes do not neatly follow one route. Buyers often begin with RERA, reach the execution stage, and then evaluate insolvency as a parallel or alternative strategy.
In some cases, the mere possibility of insolvency pushes developers toward settlement. In others, insolvency becomes inevitable due to the scale of financial distress.
What is clear is that both mechanisms serve different purposes: RERA provides recognition of rights and liability & Insolvency addresses the financial viability of the developer.
A More Grounded Approach
For buyers, the key is timing and assessment.
If the developer is still operational and has the capacity to pay, pursuing RERA execution may be sufficient. But if the project is visibly stalled and liabilities are widespread, insolvency may offer a more realistic path—despite its uncertainties.
At the same time, insolvency should not be seen as a shortcut to recovery. It is a resolution process, not a recovery mechanism. The outcome may involve delays, restructuring, or even losses.
