Case Note & Summary
The Supreme Court dismissed civil appeals filed by erstwhile directors of corporate debtors against the NCLAT judgment which upheld the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 -- The NCLT had admitted a company petition filed by 141 allottees in a real estate project, finding them to be financial creditors with a debt and default, and that the threshold requirement under the second proviso to Section 7(1) of IBC was satisfied -- The corporate debtors failed to deliver possession of units, provide completion certificates, or execute tripartite sublease deeds as required -- The NCLAT dismissed appeals against this order, and the Supreme Court affirmed, holding that the allottees met the criteria under IBC, and the application for deposit of funds during appeal was not maintainable -- The Court emphasized the statutory requirements for insolvency initiation by real estate allottees and upheld the lower tribunals' decisions
Headnote
The Supreme Court dismissed civil appeals challenging the NCLAT judgment which upheld the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against M/s. Grand Venezia Commercial Towers Private Limited and M/s. Bhasin Infotech and Infrastructure Private Limited -- The appeals were filed by erstwhile directors of the corporate debtors -- The NCLT admitted the company petition filed by 141 allottees as financial creditors, finding a debt and default, and that the threshold requirement under the second proviso to Section 7(1) of IBC was met -- The NCLAT dismissed the appeals, and the Supreme Court affirmed, holding that the allottees qualified as financial creditors, the threshold was satisfied, and the corporate debtors failed to deliver possession or complete necessary formalities -- The Court rejected an application for deposit of funds filed during pendency of appeals as not maintainable -- The judgment emphasizes strict compliance with IBC provisions for insolvency initiation by real estate allottees
Issue of Consideration
The Issue of Consideration was whether the NCLT and NCLAT correctly initiated corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the corporate debtors based on the petition filed by allottees as financial creditors, and whether the threshold requirement under the second proviso to Section 7(1) of IBC was satisfied
Final Decision
The Supreme Court dismissed the civil appeals, upholding the NCLAT judgment and the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the corporate debtors
Law Points
- Insolvency and Bankruptcy Code
- 2016 (IBC) -- Section 7 of IBC -- Threshold requirement for allottees as financial creditors under second proviso to Section 7(1) of IBC -- Corporate insolvency resolution process -- Financial debt -- Default -- Allottees in real estate project -- Joint filing requirement -- Completion certificate -- Possession delivery -- Tripartite sublease deed -- NCLT jurisdiction -- NCLAT appellate jurisdiction
Case Details
Civil Appeal No. 13628 of 2025, Civil Appeal No. 13779 of 2025, Civil Appeal No. 13812 of 2025
SANJAY KUMAR J. , K. VINOD CHANDRAN J.
Not specified in provided text
Satinder Singh Bhasin, Ashok Kumar
Col. Gautam Mullick & Ors.
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Nature of Litigation
Civil appeals challenging the NCLAT judgment which upheld the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016
Remedy Sought
The appellants sought to set aside the NCLAT judgment and the NCLT order initiating insolvency proceedings against the corporate debtors
Filing Reason
The appellants, erstwhile directors of the corporate debtors, assailed the NCLT order admitting the company petition filed by allottees as financial creditors under Section 7 of IBC
Previous Decisions
The NCLT initiated corporate insolvency resolution process against the corporate debtors by order dated 04.12.2023 -- The NCLAT dismissed appeals against this order by judgment dated 29.10.2025
Issues
Whether the allottees qualified as financial creditors under Section 7 of the Insolvency and Bankruptcy Code, 2016
Whether the threshold requirement under the second proviso to Section 7(1) of IBC was satisfied for initiation of corporate insolvency resolution process
Whether the corporate debtors had defaulted on debt owed to the allottees
Submissions/Arguments
The allottees argued that units were not ready for occupation, no completion certificate was provided, and tripartite sublease deeds were not executed, constituting default -- The corporate debtors argued that construction was complete, possession letters were issued, and some allottees had taken possession, with completion certificate issued in 2015
Ratio Decidendi
The allottees in a real estate project qualify as financial creditors under Section 7 of IBC if they demonstrate a debt and default -- The threshold requirement under the second proviso to Section 7(1) of IBC must be strictly complied with, requiring joint filing by not less than 100 allottees or 10% of total allottees, whichever is lesser -- The corporate debtors' failure to deliver possession, provide completion certificates, or execute tripartite sublease deeds constitutes default, justifying insolvency initiation -- Applications for deposit of funds during appellate proceedings are not maintainable to prove bonafides after judgment reservation
Judgment Excerpts
Held that the NCLT correctly ascertained debt, default, and threshold requirement under Section 7 of IBC for admission of the petition -- Held that the allottees satisfied the threshold under the second proviso to Section 7(1) of IBC -- Held that the corporate debtors failed to deliver possession or complete necessary formalities, constituting default
Procedural History
Company Petition IB (IBC) No. 646/PB/2021 filed before NCLT on 07.07.2021 -- NCLT order dated 04.12.2023 initiated corporate insolvency resolution process -- Appeals filed before NCLAT as Company Appeal (AT)(INS) Nos.1593 and 1594 of 2023 -- NCLAT judgment dated 29.10.2025 dismissed appeals -- Civil appeals filed in Supreme Court as Civil Appeal Nos. 13628, 13779, and 13812 of 2025 -- Supreme Court judgment dated 04.12.2025 dismissed appeals
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: Section 7, Section 7(1), Section 9, Section 10
