IBC | Single Insolvency Petition Maintainable Against Corporate Entities Which Are Intricately Linked : Supreme Court

In a relief to homebuyers, the Supreme Court on Monday (February 2) held that in real estate projects, a single insolvency petition under Section 7 of the Insolvency & Bankruptcy Code is maintainable against more than one corporate entity if they are intrinsically connected in the execution and marketing of the project.

A bench of Justices Sanjay Kumar and K Vinod Chandran upheld the NCLAT's ruling, which has permitted a joint Corporate Insolvency Resolution Process (CIRP) against two corporate entities that were intrinsically connected to the real estate project.

The insolvency proceedings arose from the failure of the developers to hand over possession of commercial units to homebuyers despite long delays. The NCLT admitted the petition filed by the allottees, a decision later affirmed by the NCLAT. The developers and their directors approached the Supreme Court, contending that the insolvency proceedings were legally unsustainable as initiating a joint CIRP is impermissible under the IBC.

Rejecting their contention, the judgment authored by Justice Sanjay Kumar noted that since the developer (Bhasin Ltd.) and marketing company (Grand Venezia Ltd) had common directors, issued interchangeable communications to allottees, and were operationally intertwined, both companies were intrinsically connected in the execution and marketing of the project.

“The project was, therefore, to be undertaken essentially by Bhasin Ltd. It was only thereafter, i.e., on 14.12.2009, that Bhasin Ltd. entered into an agreement with Grand Venezia Ltd., granting it marketing rights in relation to the sale of units in the project. It is a matter of record that the two companies had common directors, including Satinder Singh Bhasin, for some length of time. Further, demand notices and possession letters were issued by Bhasin Ltd. to the allottees of Grand Venezia Ltd. and the correspondence/communications with the allottees were by both the companies interchangeably. Payment receipts also manifested the same. These documents formed part of the company petition.”, the court observed.

The Court endorsed NCLAT's decisions of Edelweiss Asset Reconstruction Company Limited vs. Sachet Infrastructure Private Limited, (2019) and Mamatha vs. Amb Infrabuild P. Ltd. and others, (2018), where the group of companies' doctrine was applied to invoke a joint CIRP against corporate debtors whose business operations are intertwined.

“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.”, the Court quoted from NCLAT's ruling in Mamatha vs. Amb Infrabuild P. Ltd. and others (supra).

In terms of the aforesaid, the appeals were dismissed.

Cause Title: SATINDER SINGH BHASIN versus COL. GAUTAM MULLICK & ORS. (with connected matters)

Citation : 2026 LiveLaw (SC) 100

Click here to download judgment

Appearance:

For Appellant(s) : Mr. Shyam Divan, Sr. Adv. Ms. Neeha Nagpal, Adv. Mr. Malak Manish Bhatt, AOR Mr. Vishal Gosain, Adv. Mr. Nikunj Mahajan, Adv. Mr. Praney Sharma, Adv. Mr. Adith Deshmukh, Adv. Mr. Arpith Jacob, Adv. Mr. Gurdeep Singh, Adv.

For Respondent(s) : Mr. Atmaram N.S. Nadkarni, Sr. Adv. Ms. Ruchira Gupta, Adv. Mr. Salvador Santosh Rebello, AOR etc. Ms. Pooja Tripathi, Adv. Mr. Mohit Sham Ali, Adv. Ms. Manisha Gupta, Adv. Ms. Moulishree Pathak, Adv. Ms. Arzu Paul, Adv. Ms. Himanshi Nagpal, Adv. Mr. Ujjawal Agrawal, Adv. Mr. Utsav Tarsolia, Adv. Mr. Gopal Sankaranarayanan, Sr. Adv. Mr. Saket Sikri, Adv. Mr. Nikhil Kohli, Adv. Mr. Nalin Talwar, Adv. Ms. Ritika Gambhir Kohli, AOR Mr. Ishan Gaur, Adv. Mr. Mani Mehta, Adv. Mr. Manish Singhal, Adv. Mr. Kushank Garg, Adv. Ms. Akshaya Ganpath, Adv. Mr. Ajay Pal Singh Kuller, Adv. Ms. Saumya Tiwari, Adv. Mr. Dhruv Mehta, 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. Ms. Maira Sharma, Adv. Mr. Vaibhav Yadav, Adv. Mr. Paras Mohan Sharma, Adv. Ms. Shefali Tripathi, Adv.