NCLAT: Homebuyers Can Maintain Section 7 IBC Plea Against Multiple Corporate Debtors in Same Real Estate Project
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) can be filed against multiple corporate debtors forming part of the same real estate project. The Bench comprising Justice Rakesh Kumar Jain, Justice Mohammad Faiz Alam Khan, and Technical Member Naresh Salecha allowed an appeal filed by 115 allottees/homebuyers, setting aside an order of the National Company Law Tribunal (NCLT), New Delhi Bench-IV, which had dismissed their petition on threshold grounds.
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Background of the case
The appellants had booked apartments in the Earth Towne project, developed by Earth Infrastructure Ltd. (EIL) in collaboration with its subsidiary Earth Towne Infrastructure Pvt. Ltd. (ETIPL). EIL, which held 78% share in the project consortium, had already been admitted into CIRP in 2018, and its approved Resolution Plan was subsequently set aside by the Appellate Tribunal in 2023, with appeals pending before the Supreme Court. ETIPL, incorporated as a special purpose vehicle in 2010, was allotted land in Greater Noida by GNIDA and entered into a Development Agreement with EIL, under which ETIPL retained leasehold rights while EIL had development rights. Out of the total 3400 units, ETIPL had an 18% share (612 units), of which 220 units were sold to allottees including the appellants.
The allottees filed a petition under Section 7 of IBC before the NCLT in 2023, claiming default by ETIPL in completing the project and delivering possession. They argued that the statutory threshold under the second proviso to Section 7(1) of IBC was satisfied since 115 allottees had joined the application, far exceeding the required minimum of 22 (10% of 220 units).
NCLT’s order
The Adjudicating Authority, however, rejected the petition, holding that since many of the homebuyers had already filed claims in the CIRP of EIL, only 66 petitioners could be counted for threshold purposes. As this number did not meet the requirement of 100 homebuyers, the petition was dismissed.
NCLAT’s findings
The Appellate Tribunal disagreed with the NCLT’s reasoning, observing that the threshold requirement under Section 7 had to be assessed at the time of filing the application, not by excluding claimants whose claims were admitted in another CIRP. Referring to Manish Kumar v. Union of India [(2021) 5 SCC 1], the Bench held that “the threshold criteria is applicable at the time of filing Section 7 application and not subsequently.”
The NCLAT further noted that ETIPL had sold 220 units to allottees, which meant that only 22 applicants were required to meet the threshold. Even if ETIPL’s 18% share of the 3400 units was considered (612 units), the threshold would be 62. With 115 appellants before the Tribunal, the threshold was clearly met.
Importantly, the Tribunal highlighted that the homebuyers had entered into joint Builder Buyer Agreements with both ETIPL and EIL, giving them independent remedies against both entities. It relied on earlier rulings, including Jitendra Arora, RP of Premia Projects Ltd. v. Tek Chand and Mist Avenue Pvt. Ltd. v. Nitin Batra, where it was held that applications against two or more corporate debtors forming part of the same project are maintainable. The Bench also took note of the precedent in the Earth Iconic project, where another subsidiary landowner, Celestial Estates Pvt. Ltd., was admitted into CIRP while EIL’s CIRP was already underway, and the claims of the same allottees were admitted in both processes.
Finding that the NCLT had committed a legal error in calculating the threshold and in ignoring the maintainability of applications against multiple corporate debtors in the same project, the Appellate Tribunal allowed the appeal. It set aside the impugned order dated 21 October 2024, and remanded the matter back to the NCLT for fresh consideration. The parties have been directed to appear before the Adjudicating Authority on 26 September 2025.
Appearance
For Appellants: Ms. Vatsala Kak & Mr. Shaurya Shyam, Advocates.
For Respondent: None
Cause Title: Mr. Satyabrata Mitra and Ors. V. Earth Towne Infrastructure Pvt. Ltd
Case No: Comp. App. (AT) (Ins) No. 2171 of 2024 & I.A. No. 8108 of 2024
Coram: Justice Rakesh Kumar Jain, Justice Mohammad Faiz Alam Khan, Technical Member Naresh Salecha
