TaxTMI 
TaxTMI 
2026 (2) TMI 192
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....hta, Sr. Adv., Ms. Meenakshi Arora, Sr. Adv., Ms. Payal Chawla, Adv., Mr. Tishampati Sen, Adv., Mr. Shubhanshu Gupta, AOR, Mr. Kartik Pant, Adv., Mr. Chaitanya, Adv., Mr. Raunak Satpathy, Adv., Mr. Keith Varghese, Adv., Mr. Srijan Sonkar, Adv., Mr. Vipin Sanghi, Sr. Adv., Mr. Abhishek Anand, Adv., Mr. Mandeep Kalra, AOR, Mr. Karan Kohli, Adv., Ms. Palak Kalra, Adv., Ms. Ridhima Mehrotra, Adv., Ms. Radhika Narula, Adv., Ms. Anushna Satapathy, Adv., Ms. Chitrangada Singh, Adv., Ms. Radhika Jalan, Adv., Ms. Widaphi Lyngdoh, Adv., Mr. Yashas J, Adv., Ms. Gauri Rajput, Adv., Mr. Vaibhav Yadav, Adv., Mr. Paras Mohan Sharma, Adv., Ms. Shefali Tripathi, Adv. JUDGMENT PER SANJAY KUMAR, J 1. By order dated 04.12.2023 passed in Company Petition IB (IBC) No. 646/PB/2021, the National Company Law Tribunal, Court - V, New Delhi Bench ['the NCLT'], initiated corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 ['the Code'], against M/s. Grand Venezia Commercial Towers Private Limited ['Grand Venezia Ltd.'] and M/s. Bhasin Infotech and Infrastructure Private Limited ['Bhasin Ltd.']. Assailing the said order, Company Appeal (AT)(INS) Nos. 1593....
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....o Bhasin Ltd. by the Uttar Pradesh State Industrial Development Authority ['the UPSIDA'] (formerly, Uttar Pradesh State Industrial Development Corporation). The possession of the units was to be delivered to the allottees by May, 2013. 5. The complaint of the petitioners before the NCLT was that the units allotted to them were not made ready and were unfit for occupation. They asserted that there was no completion certificate provided by the UPSIDA in relation to their portion of the project and that the part-completion certificate which had been issued was only in respect of the showrooms, food courts, gaming zones and the cinema hall, which were of no relevance to them. According to them, the corporate debtors had not even applied for the final completion certificate, as per the RTI reply dated 24.03.2018 received by them from the UPSIDA. They asserted that, as per the Rules of the UPSIDA, in the absence of a completion certificate and without the clearance of the UPSIDA, no conveyance/sublease deed could be executed or registered, and actual possession could not be delivered. They pointed out that the property in question was leasehold land and it was necessary that the UPSID....
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....re allottees of a real estate project, to ascertain whether they fulfilled the threshold requirement stipulated by Section 7 of the Code so as to maintain their application. 8. The second proviso to Section 7(1) of the Code prescribes the threshold requirement in this regard and states to the effect that when the financial creditors who apply for initiation of corporate insolvency resolution process are allottees in a real estate project, such an application should be jointly filed by not less than one hundred such allottees in the same real estate project or not less than 10% of the total number of allottees in the same real estate project, whichever is lesser. 9. The company petition was filed on 07.07.2021 by 145 individuals but as some of them were joint allottees of a single unit, they had to be counted as one and not as two applicants. An advance copy thereof was served upon the corporate debtors on 07.06.2021 itself. Thereafter, when the company petition was returned for curing of defects, 12 allottees who figured as petitioners in the company petition were removed from the array of parties and 8 fresh allottees' names were added. The petition was then registered and n....
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....and, in consequence, the default in respect of the financial debt stood proved. 11. Dealing with the contention advanced on behalf of the corporate debtors that the application was not maintainable as it sought to initiate insolvency process against two separate corporate entities by way of one application, the NCLT noted that the Code was silent on initiation and conducting of insolvency process of related parties in a consolidated manner. The NCLT opined that interlinkage of related corporate debtors would be beneficial for value maximization and to continue such companies as going concerns after completing their insolvency processes. Reference was made in this regard to the NCLAT's decision in Edelweiss Asset Reconstruction Company Limited vs. Sachet Infrastructure Private Limited 2019 SCC OnLine NCLAT 592. The NCLT, accordingly, admitted the petition filed against both the corporate debtors. This order of admission was subjected to appeal by the erstwhile Directors of the corporate debtors before the NCLAT but, as stated earlier, without success. 12. In the impugned judgment dated 29.10.2025, the NCLAT first dealt with the contention that two separate legal entities could....
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....llottees. While dealing with the contention that a joint company petition could not be maintained against two corporate debtors, the NCLAT committed an error by attributing to the corporate debtors something that was stated by the allottees in their rejoinder in the company petition. By doing so, the NCLAT mistakenly inferred that the corporate debtors had themselves admitted that both the companies were controlled by a single management group. Notwithstanding this mistake, the NCLAT also took into account allotment letters in favour of allottees which mentioned the names of both the corporate debtors. Reference was made in one such letter issued by Bhasin Ltd. to the application submitted by the allottee to Grand Venezia Ltd. for booking a commercial office space in Grand Venezia Commercial Tower. On the same lines, the payment receipts issued to the allottees by Bhasin Ltd. mentioned the payment received from such allottees for booking spaces in the Grand Venezia Commercial Tower. 15. Significantly, the allotment letter dated 05.08.2006 issued in favour of Bhasin Ltd. by the UPSIDA, apropos the lease of the subject land, specifically mentioned that tripartite lease deeds of th....
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....nly as its agent. 18. This, according to the NCLAT, clearly showed that both the companies were involved in the project and could not claim to be independent of each other in relation thereto. The NCLAT also noted that, though delivery of possession of the units was to be made within five years from the date of allotment, the same had not taken place till date as no tripartite sublease deeds had been executed. The NCLAT opined that the construction had not been completed and found that assured returns were, admittedly, not paid to allottees since 2014. Reference in that regard was made to the letter addressed to the allottees by Grand Venezia Ltd., stating that the possession of the units would be delivered shortly, as the structure was nearing completion, but due to a recent slow-down of the real estate market, the revenue generated was needed and, therefore, difficulty was being faced in paying the monthly returns to allottees. It was proposed that, in lieu of the monthly returns for the balance period, i.e., upto the date of handing over, extra space would be offered after adjusting the balance amount due from the allottee or the monthly returns would be adjusted against the ....
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....ently urged is that the allottees could not have made substitutions in the company petition after the filing thereof on 07.07.2021, even if the same was returned for curing of defects. It is the admitted position that alterations were, in fact, made in the cause-title with regard to the names of the allottees who appeared as petitioners therein and the refiled petition did not reflect the same names as were there in the petition initially filed on 07.07.2021. As an advance copy of the earlier petition was sent to the corporate debtors on 07.06.2021, the appellants would contend that such changes were made without the authority of law. They assert that the same amounts to an abuse of process, warranting rejection of the company petition in limine. We may note, at this stage, that this argument was not advanced either before the NCLT or even before the NCLAT. However, we propose to deal with the same as it touches upon and impacts the maintainability of the company petition. In this context, Rule 28 of the National Company Law Tribunal Rules, 2016 ['NCLT Rules'], assumes significance. It reads as under: "28. Endorsement and scrutiny of petition or appeal or document.- ....
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.... 07.07.2021 did not result in the same being 'registered' on the file of the NCLT and it was only after rectification/amendment of the petition and upon its refiling, with the defects therein cured, that the same would have been registered. Notably, in Surendra Trading Company vs. Juggilal Kamlapat Jute Mills Company Limited and others (2017) 16 SCC 143, this Court held that till the objections in an application filed under Sections 7, 9 or 10 of the Code are removed, it is not to be treated as an application validly filed, as it is only after the application is complete in every respect that it is required to be entertained. Therefore, the alteration in the memorandum of parties in the company petition after it was filed on 07.07.2021, but returned for curing the defects therein, did not amount to an abuse of process as is being contended by the appellants. It was only after 'registration' of the company petition takes place under Rule 28(4) of the NCLT Rules that it would have been impermissible for the petitioning allottees to make any changes therein without the leave of the NCLT. As the changes in question were made by them prior to that event, no adverse inference can be draw....
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....jointly liable to the allottees of the project. The NCLT and the NCLAT were, therefore, justified in concluding that the corporate debtors were intrinsically linked and that it would be in their interest to have a joint insolvency process so as to maximise asset realisation. 27. Significantly, in Edelweiss Asset Reconstruction Company Ltd. (supra), the NCLAT was dealing with five companies which had jointly undertaken development of a township. The NCLAT opined that a 'Group Corporate Insolvency Resolution Process' proceeding was required to be initiated against all five of them in such circumstances. This order stood confirmed, when Civil Appeal (Diary) No. 1010 of 2020, challenging the same, was dismissed by this Court on 10.02.2020. Earlier, in Mamatha vs. Amb Infrabuild P. Ltd. and others (2019) 5 Comp Cas-OL 130 = 2018 SCC Online NCLAT 785, the NCLAT had observed that if two corporate debtors collaborate and form an independent corporate entity for developing land and allotting premises to allottees, the application under Section 7 of the Code would be maintainable against both of them jointly and not individually against one or the other. This judgment was confirmed by thi....
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....ertificate was conditional and was not for the whole project. According to it, affidavit dated 28.01.2022 was filed in the suit, stating that the part-completion certificates dated 07.05.2011 and 16.04.2015 were ineffective as the conditions stipulated therein were not complied with. The UPSIDA further stated that its dues of Rs.54.38 crores were payable by Bhasin Ltd. The writ petition filed against it by Bhasin Ltd. in that regard was dismissed by the Allahabad High Court on 08.09.2025, granting liberty to the UPSIDA to approach the Interim Resolution Professional (IRP) to lodge its claim. 30. In this regard, we may note that Regulation 2.16.0 of the Uttar Pradesh State Industrial Development Area Building Regulations, 2004, falling in Chapter-2, titled 'Procedural Requirements for Building Permission', deals with 'Occupancy Certificate' and states that no building erected, re-erected or altered, shall be occupied in whole or in part until the issuance of an Occupancy Certificate by the Authorised Officer in the form given in Appendix-11. It is an admitted fact that an Occupancy Certificate in the prescribed format in Appendix-11 has not been issued by the UPSIDA till date for....
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....n/part-occupancy letters and the notional/physical possession delivery letters issued to the allottees, therefore, can be taken to be proof of completion of the construction in all respects, as is being claimed by the appellants. Further, their claim in that regard is also belied by the Commissioner's Report dated 17.05.2018 filed before the High Court of Delhi in an earlier winding-up proceeding. Therein, the Commissioner had recorded that none of the units were ready and fit for occupation as on the date of his inspection. This report formed part of the record before the NCLAT. 34. Though we would have ordinarily restricted the scope of enquiry in this regard to documents prior to the date of admission of the company petition and which formed part of the record before the NCLT, we may note that the appellants secured an interim order from the NCLAT on 07.12.2023 by claiming that the construction was complete and that the units were ready to occupy. This interim order continued to operate for nearly two years thereafter. It was during the pendency of the proceedings that the NCLAT undertook the exercise of verifying this claim of the appellants and appointed an Observer to visi....