Supreme Court Affirms Maintainability Of Joint Section 7 Petition Against Interlinked Corporate Debtors In A Composite Real Estate Project

The Hon'ble Supreme Court of India ("SC"), by judgment dated February 2, 2026, in Satinder Singh Bhasin v. Col. Gautam Mullick & Ors.,¹ affirmed the concurrent findings of the Hon'ble National Company Law Appellate Tribunal ("NCLAT") and Hon'ble National Company Law Tribunal ("NCLT"), upholding the maintainability of a joint application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("Code") against two corporate debtors forming part of a composite and integrated real estate project.

In the instant case, an application was preferred by 141 petitioners against two interlinked corporate debtors, namely Grand Venezia Commercial Towers Private Limited ("GVCTPL") and Bhasin Infotech and Infrastructure Private Limited ("BIIPL") (collectively referred to as the "Corporate Debtors"). Although 141 petitioners were arrayed in the application, the application effectively represented the allottees of 103 distinct units, as several applicants were joint allottees of the same unit and were therefore counted as one.

By its order dated December 4, 2023, NCLT noted that the construction of the allottees' portion of the project remained incomplete, no final completion certificate had been obtained and only a partial completion certificate had been issued. Further, assured returns had not been paid since 2014 and possession of the units had also not been handed over to the financial creditors/allottees. Thus, NCLT concluded that the essential requirements for admission of an application under Section 7 of the Code, namely, the existence of a financial debt and the occurrence of default, stood duly established.

In addition to satisfying the requirement of debt and default, NCLT also examined whether the statutory threshold under the second proviso to Section 7(1) of the Code had been met. The proviso mandates that an application by financial creditors who are allottees under a real estate project must be filed by not less than one hundred allottees or ten percent of the total number of allottees, whichever is less. Since allottees of 103 units were on record at the time of filing, NCLT held that the threshold stood satisfied. In doing so, reliance was placed on the judgment of the SC in Manish Kumar v. Union of India, ² wherein it was clarified that the quorum of one hundred allottees must be assessed as on the date of filing of the petition, and that subsequent withdrawals pursuant to settlements would not affect the maintainability of the application.

Further objection raised before NCLT pertained to the maintainability of a single petition against two separate corporate entities. NCLT observed that although the Code does not expressly provide for consolidated or group corporate insolvency resolution processes, judicial precedents has recognised the permissibility of joint proceedings in appropriate cases. Reliance was placed on Edelweiss Asset Reconstruction Company Limited v. Sachet Infrastructure Private Limited,³ where initiation of a group corporate insolvency resolution process against multiple entities that had jointly undertaken development of a township was considered necessary in the interest of value maximisation and coordinated resolution. In view of the above, looking at the composite nature of the project and the interlinkage between GVCTPL and BIIPL, the NCLT upheld the maintainability of the joint application.

Aggrieved by the order of admission, Mr. Satinder Singh Bhasin and Mr. Ashok Kumar ("Appellants"), who are the erstwhile Directors of the Corporate Debtors, preferred an appeal before NCLAT, contending that GVCTPL and BIIPL were distinct legal entities and that the allottees had filed a joint petition only to overcome the threshold of one hundred allottees. It was argued that if the allottees of each company were considered separately, the statutory requirement under the second proviso to Section 7(1) of the Code would not be met.

While upholding the findings of NCLT, NCLAT vide its order dated October 29, 2025 noted that 103 allottees were on record as on the date of filing of the petition and that the statutory threshold therefore stood fulfilled. It further held that the Code does not prohibit the filing of a joint petition for initiation of insolvency proceedings against two corporate entities where their operations are intrinsically connected. In this regard, reliance was placed on Mist Avenue Pvt Ltd v. Nitin Batra & Ors.,⁴ wherein joint insolvency proceedings were permitted against three companies that had collaboratively developed a real estate project under a collaboration agreement. The NCLAT also observed that separate proceedings in such circumstances could jeopardise the interests of allottees, particularly in real estate insolvencies where projects are integrated in their development and execution.

While taking note of the terms and conditions of the Joint Venture Agreement executed between GVCTPL and BIIPL, the NCLAT observed that both entities were actively involved in the development and marketing of the project, were under common group management and were collaborating in the same integrated project. In light of these findings and noting that the project remained incomplete and that the units were unfit for immediate possession, the NCLAT dismissed the appeal and affirmed the order of admission passed by the NCLT.

The Appellant had also filed an Interlocutory Application offering to deposit Rs. 15.62 crores, purportedly sufficient to settle the claims of 55 allottees out of 103, as an attempt to demonstrate its bona fides. However, the said application was rejected by the NCLAT vide its order dated October 7, 2025, noting that it had been filed after the judgment had already been reserved.

Thereafter, the Appellants challenged the concurrent orders passed by the NCLT and NCLAT, including the order passed in the aforementioned interlocutory application, before the Supreme Court, which framed the following two principal issues for consideration: (i) whether the statutory threshold under the second proviso to Section 7(1) of the Code stood satisfied; and (ii) whether a joint application under Section 7 of the Code could validly be maintained against two corporate debtors.

On the first issue, SC found no merit in the Appellants' contention that certain allottees had settled their claims. SC observed that no documentary evidence had been produced to substantiate the plea of settlement and in the absence of such proof, the number of allottees was liable to be reckoned as 103. Further, reiterating the ratio in Manish Kumar (supra), SC held that the relevant date for determining compliance with the quorum requirement is the date of filing of the petition and not the date of admission or hearing. Since 103 allottees had joined the petition on the date of filing, the statutory threshold stood duly satisfied.

With regard to second issue, SC examined the relationship between GVCTPL and BIIPL in detail and noted that although, the land had originally been allotted by the Uttar Pradesh State Industrial Development Authority in favour of BIIPL, a joint venture agreement had subsequently been executed with GVCTPL, granting it exclusive marketing rights in relation to the sale of units. SC also recorded that GVCTPL had purchased 1,114 units in the project from BIIPL for a consideration of Rs. 218 crores and that both entities shared common directors. With these facts, SC affirmed that that the companies were intrinsically linked in the development, execution, and marketing of the project.

Relying upon the principles enunciated in Edelweiss Asset Reconstruction Company Limited (supra) and Mamatha v. AMB Infrabuild Pvt. Ltd.,⁵ SC held that where multiple corporate entities collaborate in developing and marketing a real estate project and are jointly answerable to allottees, a consolidated insolvency process may be warranted in the interest of value maximisation and coordinated resolution.

The absence of an express statutory framework for "group insolvency" under the Code does not operate as a prohibition against a joint application where the facts so justify. In the present case, the intertwined roles of BIIPL as developer and GVCTPL as marketing entity rendered them jointly liable to the allottees, and a fragmented process would have undermined the objectives of the Code.

In view of the foregoing, SC upheld the maintainability of the joint Section 7 petition against both Corporate Debtors, affirming that financial debt and default had been duly established and that the statutory threshold stood satisfied as on the date of filing. SC further declined to interfere with NCLAT's order rejecting the offer to deposit Rs. 15.62 crores, observing that the offer was premised on unsubstantiated assertions regarding settlement and therefore lacked factual foundation.

The judgment reinforces two significant principles in real estate insolvency jurisprudence, first, that the quorum requirement under the second proviso to Section 7(1) is to be assessed strictly as on the date of filing of the petition; and second, that in cases involving composite real estate projects executed through interlinked corporate entities, a joint insolvency application is maintainable where such entities are inextricably connected and jointly accountable to allottees. The decision advances procedural certainty while simultaneously promoting value maximisation and coordinated resolution under the Code.

Footnotes

1. Civil Appeal No. 13628 of 2025.

2. (2021) 5 SCC 1.

3. 2019 SCC OnLine NCLAT 592.

4. 2023 SCC Online NCLAT 2296.

5. 2018 SCC Online NCLAT 785.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.