The Supreme Court has clarified that corporate insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, may be initiated jointly against interlinked real estate developers, and that the statutory threshold of 100 financial creditor-allottees must be assessed solely as of the date of petition filing. This judgment resolves long-standing ambiguity regarding the maintainability of consolidated insolvency applications in complex real estate projects involving multiple corporate entities.
Background & Facts
The Dispute
The dispute arose from the failure of M/s. Grand Venezia Commercial Towers Private Limited and M/s. Bhasin Infotech and Infrastructure Private Limited to deliver possession of commercial office units in a mixed-use real estate project launched in 2005. Over 140 individual allottees, who had paid substantial sums for office spaces, alleged non-completion of construction, absence of a final completion certificate, and non-execution of mandatory tripartite sublease deeds with the Uttar Pradesh State Industrial Development Authority (UPSIDA). The allottees claimed that possession could not lawfully be delivered without such deeds, as stipulated in the original lease agreement and allotment letters.
Procedural History
The case progressed through multiple forums:
- 07.07.2021: 145 individual allottees filed a joint company petition under Section 7 of the Insolvency and Bankruptcy Code against both corporate debtors.
- 22.10.2021: After defect-curing, the petition was registered with 141 petitioners, representing allottees of 103 units.
- 04.12.2023: National Company Law Tribunal (NCLT) admitted the petition, finding the threshold of 100 allottees satisfied and default established.
- 29.10.2025: National Company Law Appellate Tribunal (NCLAT) dismissed appeals filed by former directors of the corporate debtors.
- 2025: Satinder Singh Bhasin filed an interlocutory application offering ₹15.62 crores to settle remaining claims, which was rejected.
Relief Sought
The appellants sought to set aside the admission of the insolvency petition, arguing that: (1) the threshold of 100 allottees was not met; (2) joint petition against two separate entities was impermissible; and (3) construction was complete and possession had been delivered. Satinder Singh Bhasin also sought to overturn the rejection of his settlement offer.
The Legal Issue
The central question was whether a joint insolvency petition under Section 7 of the Insolvency and Bankruptcy Code can be maintained against two interlinked corporate debtors in a real estate project, and whether the statutory threshold of 100 financial creditor-allottees must be assessed as of the date of filing or at the time of admission.
Arguments Presented
For the Appellant
The appellants contended that: (1) the 103 allottees could not be aggregated across two distinct legal entities; (2) 28 allottees had taken possession and 13 had been refunded, reducing the number of active claimants to 55; (3) the petition was defective due to substitution of parties after filing, amounting to abuse of process; and (4) the project was complete, evidenced by part-completion certificates and possession letters issued in 2015. They relied on Gurdial Singh v. Raj Kumar Aneja to argue that pleadings cannot be amended after filing without court permission.
For the Respondent
The allottees and the NCLT/NCLAT argued that: (1) the two companies were functionally integrated, sharing directors, payment receipts, marketing rights, and contractual obligations; (2) the threshold of 100 allottees was met on the date of filing, as held in Manish Kumar v. Union of India; (3) amendments made during defect-curing under Rule 28 of the NCLT Rules were lawful; and (4) possession could not be lawfully delivered without tripartite sublease deeds, which remained unexecuted. They relied on Edelweiss Asset Reconstruction Co. Ltd. v. Sachet Infrastructure and Mamatha v. Amb Infrabuild to establish that joint insolvency is permissible for interlinked entities.
The Court's Analysis
The Supreme Court undertook a rigorous statutory and factual analysis. It first affirmed that Section 7(1) of the Code permits joint petitions against multiple corporate debtors where their operations are functionally integrated. The Court emphasized that the Code’s objective of value maximization and going concern preservation supports consolidation where entities are interdependent.
"The two companies were not independent actors but operated as a single economic unit in relation to the project, with common directors, shared payment receipts, and a joint marketing arrangement."
The Court rejected the argument that the petition was defective due to substitution of parties. It held that Rule 28 of the NCLT Rules explicitly permits amendment or rectification of petitions returned for defects prior to registration. The filing on 07.07.2021 was not a registered pleading; registration occurred only after defect-curing on 22.10.2021. Thus, the substitution did not violate procedural norms.
The Court also dismissed claims of completion. It examined the UPSIDA’s allotment letter, lease deeds, and regulatory framework under the Uttar Pradesh Building Regulations, 2004, which required an Occupancy Certificate in prescribed form before possession could be delivered. No such certificate was issued. The Observer’s Report confirmed that floors 3 - 15 were structurally incomplete, lacking basic amenities, fire safety, and partitions. The Court held that notional possession letters and part-completion certificates were legally insufficient under the contractual and statutory regime.
The Court reaffirmed the holding in Manish Kumar v. Union of India: the crucial date for assessing the 100-allottee threshold is the date of filing, not admission or hearing. The petition, as filed, included 103 allottees, satisfying the statutory minimum.
The Verdict
The Supreme Court dismissed all three appeals. It held that the joint insolvency petition against Grand Venezia Ltd. and Bhasin Ltd. was legally maintainable, the threshold of 100 allottees was satisfied as of the filing date, and the construction was not complete. The rejection of the settlement offer was upheld as factually and legally unfounded.
What This Means For Similar Cases
Joint Insolvency Is Valid for Integrated Real Estate Projects
- Practitioners may now file joint petitions under Section 7 IBC against multiple developers if they share management, financial control, or contractual obligations toward allottees.
- Evidence of shared payment receipts, common directors, and unified marketing agreements will be decisive in establishing functional integration.
- Insolvency professionals must assess the entire project structure, not just corporate formalities, when evaluating petition maintainability.
Threshold Is Fixed at Filing Date, Not Admission
- The 100-allottee requirement under Section 7(1) must be assessed solely on the date the petition is first presented to the NCLT.
- Subsequent withdrawals, settlements, or refunds do not invalidate the petition.
- Practitioners must preserve and timestamp all allottee lists at the time of filing to avoid challenges.
Possession Cannot Be Deemed Delivered Without Statutory Compliance
- Physical or notional possession letters are legally meaningless if tripartite sublease deeds or Occupancy Certificates are not executed.
- In leasehold real estate projects, compliance with land authority conditions (e.g., UPSIDA) overrides developer assertions of completion.
- Insolvency petitions may be filed even if developers claim possession was delivered, if statutory or contractual prerequisites remain unmet.
