NCLAT Upholds CIRP Against Joint Developers for Incomplete Real Estate Project

Case Details: Ashok Kumar v. Col Gautam Mullick [2025] 180 taxmann.com 103 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Ajai Das Mehrotra, Technical Member & Yogesh Khanna, Judicial Member
• Gaurav Mitra, Malak Bhatt, Nikunj Mahajan, Ms Neeha Nagpal & Praney Sharma, Advs. for the Appellant.
• Amit Kumar, Akshat Kumar, Abhishek Anand, Karan Kohli, Vipul Ganda, Pradeep Jain, Shubhanshu Gupta, Raunak Satpathy, Sarthak Jain, Adesh Kumar Chaudhary, Karan Vir Gogia, Varaai Kr. Gupta, Ms Ridhima Mehrotra, Kartik Pant, Srijan Sonkar, Ms Nittu Barik, Annik Mishra, Tisham Pati Sen, Advs. & Ms Ruchira Gupta for the Respondent.

Facts of the Case

In the instant case, two group entities named Bhasin Infotech & Infrastructure Pvt. Ltd. and Grand Venezia Commercial Towers Pvt. Ltd., jointly undertook the development of the “Grand Venice” commercial real estate project.

When these companies failed to hand over completed units to purchasers, 103 allottees filed a single application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against both companies. NCLT admitted the application. The corporate debtors challenged this decision, asserting that they were separate legal entities, that a combined Section 7 application was not legally maintainable, that the construction of the project had been completed, and that any delay was solely due to the Uttar Pradesh State Industrial Development Corporation (UPSIDC) not executing the required tripartite lease deeds.

NCLAT Held

The NCLAT rejected these contentions. It held that the Insolvency and Bankruptcy Code does not prohibit the initiation of simultaneous corporate insolvency resolution proceedings against two entities that are jointly developing the same real estate project, especially where there is common management, common documentation, common allotment letters, and a joint venture agreement showing that their operations are interconnected.

The NCLAT further observed that the statutory requirement of having at least 100 allottees was fulfilled on the date the application was filed. Importantly, independent reports submitted by the Interim Resolution Professional, the Court appointed Observer, and the UPSIDC confirmed that the project remained substantially incomplete. Floors three to eight were found to be bare structures lacking basic fittings, floors nine to fifteen had no construction at all, essential infrastructure such as lifts and staircases had not been installed, statutory approvals and No Objection Certificates were not obtained, and the units were entirely unfit for possession.

It was also noted that no tripartite lease deeds had been executed since 2006, assured returns had not been paid since 2014, and there were issues such as non-submission of allottee lists, unpaid dues, and instances of double allotment.

In light of these findings, the NCLAT concluded that the corporate debtors were clearly in default and had failed to fulfil their contractual and statutory obligations toward the allottees. It held that the joint application was legally valid. Accordingly, the appeals were dismissed, and the order of the National Company Law Tribunal admitting the corporate insolvency resolution process was affirmed.

List of Cases Reviewed

• Order dated 04.12.2023 passed by the NCLT, New Delhi in CP(IB) No. 646/2021 (Para 27) affirmed
• Mist Avenue (Pvt.) Ltd. v. Nitin Batra [2024] 162 taxmann.com 582 (NCLAT-New Delhi)/Company Appeal (AT)(Insolvency) No.127/2023 [Para 20] followed

List of Cases Referred to

• Navin Raheja v. Shilpa Jain [2020] 113 taxmann.com 459/159 SCL 421 (NCL-AT) (para 11)
• Mist Avenue (Pvt.) Ltd. v. Nitin Batra [2024] 162 taxmann.com 582 (NCLAT- New Delhi) (para 20).