Real estate insolvency maintainability upheld where connected project entities and continuing default supported a joint Section 7 petition.

A real estate insolvency petition by allottees was held maintainable where two corporate debtors formed part of the same integrated project with common control, shared documentation and interconnected allotment arrangements. The statutory allottee threshold under the proviso to Section 7 of the Insolvency and Bankruptcy Code was assessed as on the date of filing, so later settlements or withdrawals did not defeat maintainability. Default was also established because the units remained incomplete, essential amenities and safety works were missing, and the required tripartite lease deeds were not executed, while the project was not lawfully fit for handover. Pending disputes with the development authority did not displace continuing default.

---

---

Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable when filed by allottees of two closely connected corporate debtors in a single petition and whether the statutory threshold of allottees was satisfied on the date of filing. (ii) Whether the corporate debtors had committed default in handing over complete units and executing the required tripartite lease deeds, justifying initiation of corporate insolvency resolution process.

Issue (i): Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable when filed by allottees of two closely connected corporate debtors in a single petition and whether the statutory threshold of allottees was satisfied on the date of filing.

Analysis: The record showed that the two corporate debtors were part of the same integrated real estate project, had common control, common directors, and shared project documentation and allotment arrangements. The statutory threshold for allottees under the proviso to Section 7 had to be examined on the date of presentation of the application, and subsequent settlements or withdrawals did not affect maintainability. The materials placed did not substantiate the plea that the minimum threshold was not met. The Code did not bar a joint insolvency process in the facts of a closely interlinked project.

Conclusion: The petition was maintainable, the threshold requirement stood satisfied, and the objection to a joint Section 7 proceeding failed.

Issue (ii): Whether the corporate debtors had committed default in handing over complete units and executing the required tripartite lease deeds, justifying initiation of corporate insolvency resolution process.

Analysis: The project reports, inspection material, and contemporaneous correspondence showed that the units remained incomplete, critical amenities and safety works were missing, and the promised possession could not lawfully be handed over. The non-execution of tripartite lease deeds and the continuing incomplete status of the project established failure to honour the obligations owed to the allottees. The existence of pending disputes with the development authority did not displace the finding that the project was not ready and that default continued.

Conclusion: Default was established and the initiation of corporate insolvency resolution process was justified.

Final Conclusion: The appeal failed on both maintainability and merits, and the order admitting the Section 7 application was sustained.

Ratio Decidendi: In a real estate insolvency petition by allottees, the threshold under the proviso to Section 7 is tested as on the date of filing, subsequent settlements do not defeat maintainability, and a joint Section 7 application may be sustained where the corporate debtors are operationally and contractually interlinked in the same project and default remains proved on the record.

---