Resolution of real estate projects: CIRP limited to securities-backed projects; project-wise resolution and moratorium narrowed accordingly.

Financial creditor demonstrated debt and default under loan and settlement agreements, exceeding statutory threshold, justifying initiation of CIRP. The CIRP and moratorium were held to be confined to those projects and assets expressly secured under the loan documents (Mother City Lucknow, Mother City Extension including Sushant Golf City, and specified Ajmer, Jodhpur and Jaipur assets), and not to all projects of the corporate debtor. The insolvency process must proceed on a project-wise basis with the Adjudicating Authority to determine the mode and manner of resolution for the specified projects, safeguarding allottee/homebuyer interests and focusing on revival and completion.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the financial creditor proved a "financial debt" and "default" warranting admission of the insolvency application.

(ii) Whether, having regard to the loan documentation and securities, the corporate insolvency resolution process and moratorium could lawfully extend to all projects of the corporate debtor or had to be confined to only those projects/assets forming part of the agreed security/repayment structure.

(iii) What directions were required to implement a project-wise resolution approach for the corporate debtor as a real estate developer, including participation of the development authority and handling of exclusion claims relating to specific land/assets.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Proof of financial debt and default for admission

Legal framework: The Court applied the Section 7 admission standard that the adjudicating authority must verify existence of a financial debt and occurrence of default; once satisfied and the application is complete, admission follows. The Court treated disputes only as to quantum (where default above the statutory threshold exists) as not defeating admission.

Interpretation and reasoning: The material placed showed two term loan facilities, disbursements, subsequent settlement arrangements, partial payments, termination of settlement, and a demand for the entire outstanding. In the corporate debtor's reply, default was not denied; only the amount claimed as outstanding was disputed (asserting a smaller outstanding under a revised settlement). The Court held that such a quantum dispute does not negate debt and default for Section 7 admission when admitted default remains above the statutory threshold.

Conclusions: The Court affirmed that sufficient material proved financial debt and default under the two loan agreements, and the insolvency application was rightly admitted. The admission order initiating insolvency was upheld on this point.

Issue (ii): Extent of moratorium/CIRP-whether all projects or only secured/identified projects

Legal framework: The Court examined the loan sanction terms and security package as forming the basis for determining which projects/assets were implicated in the insolvency process, and applied the Tribunal's established approach that insolvency in real estate matters should proceed project-wise where initiation is tied to a particular project or project-specific receivables/securities. The Court also applied the amended CIRP Regulations enabling project-wise resolution plans, and treated the project-wise model as necessary to avoid collateral prejudice to unrelated projects and stakeholders.

Interpretation and reasoning: On the loan terms, the Court found that while end-use purposes were not confined to a single project, the repayment sources and security were specifically structured around identified receivables and mortgaged assets primarily connected with Lucknow "Mother City/Mother City Extension" and certain built-up properties in Rajasthan (Ajmer, Jodhpur, Jaipur). The Court held that extending CIRP and moratorium to projects not covered by the loan security/repayment structure would unnecessarily harm stakeholders of unrelated projects (including homebuyers and public authorities) and was not warranted at the instance of this lender's default claim. The Court distinguished earlier instances involving the same corporate debtor where CIRP had been confined to particular projects, and adopted the same principle here based on the securities and project-linkage reflected in the loan documents and settlement security schedule.

Conclusions: The Court restricted the CIRP and moratorium to (a) the corporate debtor's Lucknow projects identified as "Mother City" and "Mother City Extension" (including the referenced Lucknow plots/FSI/golf plots and associated receivables), and (b) specified built-up property assets in Rajasthan (Ajmer, Jodhpur, Jaipur) referred to as security. Other projects in Uttar Pradesh (other than the confined Lucknow projects) and in other States (including Haryana and Punjab) were held not to be affected by the moratorium/CIRP under the impugned admission order.

Issue (iii): Directions for project-wise resolution process and stakeholder participation/exclusion claims

Legal framework: The Court relied on the project-wise resolution mechanism contemplated by the CIRP Regulations (including the ability to invite resolution plans project-wise), and on the need for real estate insolvency to be handled in a manner protecting homebuyers and avoiding disruption of unrelated projects. The Court also treated questions such as exclusion of certain land/assets claimed by a statutory body as matters to be pursued before the adjudicating authority in accordance with law.

Interpretation and reasoning: Having confined CIRP to defined projects/assets, the Court directed the adjudicating authority to consider the mode and manner of project-wise resolution for those projects, and to consider contractual arrangements under the development framework for Lucknow projects that contemplated completion by the development authority if the developer fails. The Court further found it necessary that the relevant development authority be made a participant in the process so that the adjudicating authority could appropriately consider project completion pathways. The Court also preserved the right of a statutory housing body to pursue its exclusion application for specific land/assets from the insolvency estate, to be decided by the adjudicating authority.

Conclusions: The Court (a) upheld admission but confined CIRP to identified Lucknow and Rajasthan assets/projects; (b) directed the adjudicating authority to proceed with and structure a project-wise resolution for those confined projects/assets; (c) directed consideration of whether, under the applicable development arrangements, the development authority should be directed to complete the Lucknow projects; (d) directed that the relevant development authority be made a party to the insolvency process and allowed to file affidavit; (e) clarified that commencement date remains the original admission date; and (f) left exclusion disputes over specific land/assets to be adjudicated by the adjudicating authority on applications filed there.

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