Settlement-driven CIRP closure allowed; promoter-funded completion permitted under IRP supervision, with IRP fees preserved and creditors' rights reserved.

CIRP admitted under Section 7 was closed where a settlement framework among stakeholders, withdrawal by certain petitioning allottees, promoter undertakings to fund completion, and evidence of regulatory clearances and IRP preparatory steps justified reassessment; outcome: CIRP terminated. Construction of the real estate project was permitted to proceed funded by the promoter under the supervision of the interim resolution professional, with directions that the IRP be paid fees and reasonable expenses and that eligible allottees retain liberty to initiate fresh proceedings if valid grounds emerge; outcome: promoter-funded completion under IRP supervision permitted.

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Issues: (i) Whether the CIRP admitted under Section 7 of the Insolvency and Bankruptcy Code, 2016 should be continued or closed in view of subsequent developments including settlement/conciliation and promoter funding for completion of the project; (ii) Whether construction of the real estate project may proceed funded by the promoter under the supervision of the interim resolution professional and related consequential directions.

Issue (i): Whether the CIRP admitted under Section 7 of the Insolvency and Bankruptcy Code, 2016 should be continued or closed in view of subsequent developments including settlement/conciliation and promoter funding for completion of the project.

Analysis: The admissions under Section 7 were challenged in appeals where intervening events included a registered association of allottees entering into a conciliation agreement with the corporate debtor, affidavits indicating that certain petitioning allottees no longer wished to pursue Section 7 proceedings, and material placed on record showing promoter readiness to fund construction and requisite regulatory no objections. Status reports filed by the interim resolution professional record steps taken towards commencement of construction and regulatory clearances or applications for renewal. The combination of a settlement framework among stakeholders, promoter funding proposals, and supervisory involvement by the interim resolution professional formed the factual basis for reassessing continuation of CIRP.

Conclusion: The admission of CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016 is closed.

Issue (ii): Whether construction of the real estate project may proceed funded by the promoter under the supervision of the interim resolution professional and what consequential directions follow.

Analysis: The record includes promoter undertakings and documentation of regulatory clearances and applications, alongside status reports from the interim resolution professional describing preparatory steps and arrangements with a new developer. Given the nature of the asset as a real estate project and the expressed support of a significant body of allottees for completion, continued CIRP was not necessary to achieve completion. The interim resolution professional is directed to take appropriate steps to enable construction to proceed under supervision, and the IRP is to be paid fees and reasonable expenses incurred in the CIRP to date. Liberty is granted to requisite allottees to initiate fresh proceedings under Section 7 if grounds exist.

Conclusion: Construction may proceed funded by the promoter under the supervision of the interim resolution professional; IRP to be paid fees and reasonable expenses; liberty to eligible allottees to initiate fresh Section 7 proceedings is granted.

Final Conclusion: The appeals are allowed by closing the CIRP and permitting promoter-funded construction under IRP supervision, while preserving the right of eligible allottees to file fresh Section 7 proceedings if justified.

Ratio Decidendi: Where stakeholders effect a settlement framework and the promoter undertakes to fund completion of a real estate project with supervisory oversight by the interim resolution professional and necessary regulatory permissions, continuation of a CIRP admitted under Section 7 of the Insolvency and Bankruptcy Code, 2016 may be closed and construction permitted to proceed under supervision, subject to payment of IRP fees and preservation of the right to initiate fresh proceedings by eligible creditors.

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