Supreme Court Upholds Joint Insolvency Proceedings Against Linked Real Estate Firms, In a significant ruling, the Supreme Court validates the joint insolvency resolution process for two interlinked companies involved in a stalled real estate project, ensuring justice for financial creditors.
The Supreme Court of India, in a landmark judgment, has upheld the initiation of a joint insolvency resolution process against M/s. Grand Venezia Commercial Towers Private Limited and M/s. Bhasin Infotech and Infrastructure Private Limited. The ruling came in response to appeals filed by the erstwhile directors of the companies, challenging the earlier orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).
The case, titled "Satinder Singh Bhasin v. Col. Gautam Mullick," involved a real estate project where the financial creditors, comprising allottees of commercial office spaces, had moved the NCLT under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The appellants argued against the maintainability of a joint petition for insolvency, asserting that the two companies should be treated as separate legal entities.
However, both the NCLT and NCLAT had previously found the companies intrinsically linked through their joint involvement in the project. The Supreme Court, in its judgment dated February 2, 2026, confirmed this view, highlighting that the companies shared management, issued joint allotment letters, and were collectively responsible for the project’s completion.
The Court emphasized that initiating a joint insolvency resolution process against closely connected corporate debtors is permissible under the IBC, especially when it serves the purpose of value maximization and asset realization. The decision ensures that the rights of the financial creditors, who had invested in the project, are protected.
The Supreme Court's ruling also clarified the threshold requirement under Section 7 of the IBC, which necessitates a minimum of 100 allottees or 10% of total allottees to file the petition. The Court upheld that this threshold was met at the time of filing, despite subsequent settlements with some allottees.
Furthermore, the Court addressed the appellants' claims of project completion and possession delivery, stating that the evidence presented, including part-completion certificates and notional possession letters, were insufficient to establish that the project was complete or that possession had been duly delivered to the allottees.
The ruling serves as a precedent in the domain of real estate insolvency cases, reinforcing the legal framework for dealing with complex corporate structures involved in single projects. It underscores the judiciary's commitment to ensuring that financial creditors, particularly individual allottees in real estate projects, have a viable legal recourse in the face of default.
Statutory Provision(s): Insolvency and Bankruptcy Code, 2016 Section 7
Satinder Singh Bhasin v. Col. Gautam Mullick, (SC) : Law Finder Doc id # 2847458
