NCLAT Delhi: Reverse CIRP Not A Statutory Right; Upholds Insolvency Proceedings Against Supertech Realtors
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has upheld the initiation of the Corporate Insolvency Resolution Process (CIRP) against Supertech Realtors Pvt. Ltd., dismissing an appeal filed by its suspended director Ram Kishore Arora. The Tribunal clarified that the concept of Reverse CIRP is not an enforceable right but a pragmatic mechanism that can be applied only when financial creditors and stakeholders unanimously consent to it.
A Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) observed that once debt and default are established, the Adjudicating Authority is bound to admit a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) and cannot compel creditors to accept settlement or one-time settlement (OTS) proposals. “Reverse CIRP is a pragmatic tool evolved in limited cases, not an enforceable right. It requires lender confidence and stakeholder unanimity, both of which are lacking here,” the Bench held.
Background
Supertech Realtors Pvt. Ltd. had availed a loan of ₹150 crore from the Bank of Maharashtra for developing its Supernova real-estate project in Noida. Following continuous defaults, the account was classified as a Non-Performing Asset (NPA), prompting the bank to file a Section 7 IBC application claiming a default of ₹168 crore. An OTS proposal earlier sanctioned in principle by the bank was later cancelled due to non-compliance. Supertech challenged the cancellation before the Delhi High Court, which dismissed the writ petition—a decision later affirmed by the Supreme Court.
During the CIRP proceedings, the suspended director moved several revised OTS proposals, all of which were rejected by the consortium of lenders. In his appeal before the NCLAT, Arora argued that the Tribunal should permit a Reverse CIRP, enabling the promoter and a proposed co-developer to complete the project under the supervision of the Interim Resolution Professional (IRP). Relying on Flat Buyers Association Winter Hills-77 v. Umang Realtech Pvt. Ltd. and Anand Murti v. Delhi Development Authority, he contended that in real-estate insolvencies, the primary objective should be completion of the project rather than liquidation, and claimed that the bank’s rejection of the OTS proposal was arbitrary despite earlier in-principle approval.
Submissions
Opposing the appeal, the Bank of Maharashtra and the consortium of lenders submitted that debt and default were undisputed. The appellant’s repeated OTS proposals were rejected after due deliberation, and the consortium—having a total exposure of over ₹990 crore—had exercised its commercial wisdom in declining the settlement. It was argued that the promoter could not bypass the CIRP framework by nominating a co-developer of his choice to continue the project.
Findings
The NCLAT noted that the Adjudicating Authority had correctly admitted the Section 7 application, as both debt and default stood established. It held that once these elements are proved, the NCLT is duty-bound to admit the petition; it cannot compel financial creditors to negotiate or accept settlement proposals. “When debt and default are proved, the Adjudicating Authority is bound to admit the application. The reasons that persuaded the banks to not accept the OTS cannot be examined in these proceedings,” the Tribunal observed.
Examining the minutes of the lenders’ meetings, the Bench found that the OTS proposal was considered and rejected after deliberation, negating the appellant’s claim of arbitrariness. Referring to Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, it reiterated that the commercial wisdom of the lenders is paramount and not subject to judicial review. The Tribunal further analyzed the doctrine of Reverse CIRP, first recognized in Flat Buyers Association Winter Hills-77. It emphasized that the principle is case-specific and cannot be invoked as a matter of right. The concept, it said, is viable only when creditors consent and homebuyers are supportive of such an arrangement—conditions not satisfied in the present case. The lenders had rejected the proposal, and the Supernova Apartment Owners Association had expressed opposition to the suggested co-developer arrangement. Quoting E.S. Krishnamurthy v. Bharath Hi-Tech Builders Pvt. Ltd., the Bench added that an Adjudicating Authority cannot compel parties into settlement or act as a court of equity while considering a Section 7 petition.
Finding no error in the NCLT’s order, the NCLAT dismissed the appeal and upheld the admission of CIRP against Supertech Realtors Pvt. Ltd. The Tribunal concluded that Reverse CIRP is not a statutory entitlement but a discretionary mechanism, applicable only in exceptional real-estate cases where lenders and homebuyers jointly support the arrangement.
Appearance
For Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Siddharth Bhatli, Ms. Lashita Dhingra, Ms. Neha Bhal, Ms. Heena Kochar, Ms. Khyati Jain, Mr. Diwaker Lohia, Mr. Md. Hussain, Advocates.
For Respondents: Mr. Sudhir Makkar, Sr. Advocate with Mr. Nishant Awana, Ms. Saumya Gupta, Ms. Nitya Sharma, Mr. Vaibhav Yadav (Chief Manager), Mr. Ankur Jain (Sr. Manager), Advocates for Respondent No.1. Ms. Anju Agarwal IRP in person with Mr. Aadil Khan and Ms. Shipra, Advocates for Respondent No.2. Mr. Sunil Fernandes, Sr. Advocate with Mr. Palash S. Singhai and Mr. Harshal Sareen, Advocates for Applicant in IA. No. 2889 of 2025. Mr. Gajanand Kivodiwal, Ms. Tanya Singh, Advocates for Parmesh Construction Co. Ltd. Mr. Govind Jee, Mr. Dmanakuttan K.K & Mr. Rambha, Singh, Advocates for Home Buyers. Ms. Ekta Choudhary, Ayush Kumar and Rushali Sikand, Advocates for Intervenor.
Cause Title: Mr. Ram Kishore Arora Director Versus Bank of Maharashtra
Case No: Company Appeal (AT) (Insolvency) No. 1203 of 2024
Coram: Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member)
