Application U/S 7 Of IBC Can Be Filed Against Multiple Corporate Debtors Forming Part Of Same Project: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain, Justice Mohammad Faiz Alam Khan and Mr. Naresh Salecha (Technical Member) has held that an application under section 7 of the IBC can be filed against multiple corporate debtors which are part of the same project. The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by National Company Law Tribunal (NCLT) New Delhi. The Appellant submitted that the Adjudicating Authority wrongly applied the threshold based on the entire project's ignoring ETIPL's distinct share and sales, and failed to note that even the remaining 66 Appellants exceed the required 22. The Tribunal noted that the Corporate Debtor sold 220 units to the allotees including the Appellants herein and if 220 units are taken into consideration, the 10 % of the same shall be only 22 allotees in terms of Section 7(1) of the IBC, as noted earlier. Even if the Corporate Debtor's entitlement based on 18% shares of total 3400 units is considered, the threshold is 62 being wherein the present appeal has been filed by 115 Appellants, which is clearly above the required threshold in terms of Section 7 of the IBC. It further observed that there was a joint Builder Buyer Agreement between the Appellants with the Corporate Debtor as well as under EIL and therefore, it goes also in the favour of the Appellants that they have independent remedies against both Corporate Debtor as well as the EIL. The NCLAT in Mist Avenue Pvt. Ltd. vs. Nitin Batra held that filing of applications against two or more Corporate Debtors who were part of the same project are maintainable. The Tribunal held that “the Adjudicating Authority admitted the landowner company namely Celestial Estates Pvt. Ltd. when the CIRP of EIL i.e. the developer company was already underway and claims of the same Allottees admitted in the CIRP of EIL. We find that the Adjudicating Authority should have considered application of the Appellants in similar manner.” Accordingly, the present appeal was allowed and the impugned order was set aside. Case Title: Mr. Satyabrata Mitra and Ors. Vs. Earth Towne Infrastructure Pvt. Ltd Case Number: Comp. App. (AT) (Ins) No. 2171 of 2024 & I.A. No. 8108 of 2024 Judgment Date: 04/09/2025 Click Here To Read/Download The Order

Application U/S 7 Of IBC Can Be Filed Against Multiple Corporate Debtors Forming Part Of Same Project: NCLAT

Mohd Malik Chauhan

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