The Supreme Court of India on Friday dismissed three civil appeals filed by former directors of Grand Venezia Commercial Towers Pvt. Ltd. and Bhasin Infotech and Infrastructure Pvt. Ltd., clearing the way for a joint insolvency process initiated by over 100 commercial property allottees.
A Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran held that the buyers had successfully proved both financial debt and default, and that insolvency proceedings against the two closely linked companies were legally valid.
Background of the Case
The dispute arose from a large commercial real estate project launched in 2005 in Uttar Pradesh. The project promised delivery of office units by May 2013.
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In 2021, 141 allottees approached the National Company Law Tribunal (NCLT) by filing a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, claiming the status of financial creditors as recognised under the Code. They alleged that despite paying substantial amounts, their units were neither complete nor legally fit for possession.
The allottees relied on replies obtained under the Right to Information Act, 2005, showing that no final completion or occupancy certificate had been issued by the state industrial authority. According to them, this made lawful possession impossible under applicable development regulations.
The NCLT admitted the insolvency plea in December 2023. This decision was later upheld by the National Company Law Appellate Tribunal (NCLAT), leading the former directors to challenge the orders before the Supreme Court under Section 62 of the Insolvency and Bankruptcy Code, 2016.
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The Supreme Court examined four central questions:
- Whether the mandatory threshold of 100 allottees was met
- Whether a single insolvency petition could be filed against two separate companies
- Whether the project was actually complete
- Whether later settlements or offers to pay could defeat the insolvency process
Court’s Observations
On the issue of numbers, the Bench relied on settled law, noting that eligibility must be tested on the date of filing of the insolvency petition, not later developments.
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“The crucial date is the presentation of the application,” the Bench observed, adding that subsequent settlements could not erase an already valid filing.
The Court also rejected the argument that changes made to the list of allottees after the petition was returned for defects amounted to misuse of process. It clarified that amendments before formal registration were permitted under NCLT rules.
On construction status, the Court was blunt. It referred to inspection reports, photographs, and official communications showing unfinished floors, missing basic amenities, and non-functional lifts.
“Ground reality clearly belies the claim that the construction stood completed,” the judgment recorded.
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The appellants had argued that insolvency proceedings against two companies through a single petition were illegal. The Court disagreed, pointing out that both entities were deeply intertwined-through common directors, shared project documents, and a joint marketing arrangement.
“There is no possibility for either company to claim independence in relation to this project,” the Bench said, holding that joint insolvency would actually protect buyer interests and maximize asset value.
One of the appellants had offered to deposit ₹15.62 crore before the NCLAT after arguments were concluded, claiming it would settle remaining buyer claims. The Supreme Court upheld the rejection of this offer, noting that it was based on incorrect assumptions and came too late.
“The premise itself is without basis,” the Court said, refusing to interfere.
Final Decision
The Supreme Court dismissed all three civil appeals, affirming the NCLT and NCLAT orders initiating insolvency proceedings against both companies. All pending applications were also closed.
Case Title: Satinder Singh Bhasin vs. Col. Gautam Mullick & Others
