Pranav B Prem

The National Company Law Tribunal (NCLT), New Delhi Bench-III, has dismissed a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), by seventy-three homebuyers against PSA Impex Pvt. Ltd., holding that the petition was filed with fraudulent and malicious intent and not for the purpose of insolvency resolution of the corporate debtor.

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The Bench comprising Shri Bachu Venkat Balaram Das (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member) passed the order on October 14, 2025, in Inder Sain & Ors. v. PSA Impex Pvt. Ltd., while allowing an interlocutory application (IA No. 3430/2025) filed by SLB Welfare Association under Section 65 of the IBC. The Tribunal concluded that the homebuyers’ petition was intended to stall the ongoing construction work being carried out under the supervision of the Uttar Pradesh Real Estate Regulatory Authority (UPRERA).

The corporate debtor, PSA Impex Pvt. Ltd., had launched a residential housing project titled “Sampada Livia” at GH-6/B, CHI-V, Greater Noida, comprising ten towers and 726 flats. The project was initially expected to be completed within thirty-six months from the date of launch. However, the construction came to a halt after completion of merely ten percent of the work. Following numerous complaints by allottees, the UPRERA, by its order dated September 30, 2019, revoked the registration of PSA Impex Pvt. Ltd. and subsequently, on June 6, 2020, authorized the SLB Welfare Association—an association of 228 homebuyers—to complete the remaining construction work under Sections 8 and 37 of the Real Estate (Regulation and Development) Act, 2016 (RERA).

Despite being aware of the UPRERA orders, the homebuyers approached the NCLT seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against PSA Impex Pvt. Ltd. on account of non-completion and delay in possession. In response, the SLB Welfare Association filed an application under Section 65 of the IBC, contending that the Section 7 petition was filed with mala fide intent to obstruct the RERA-compliant construction work. The Association asserted that PSA Impex no longer had control or possession over the project, as both assets and development rights had been transferred to the Association in accordance with RERA directions.

Upon considering the submissions of both sides, the Tribunal noted that the UPRERA order dated June 6, 2020, authorizing the Association to complete the project, had neither been challenged nor set aside and remained fully operative. The Tribunal also took note that the registration of PSA Impex under RERA had been cancelled and the cancellation had been successively upheld by the Real Estate Appellate Tribunal, Lucknow (order dated October 20, 2020), by the Allahabad High Court (order dated March 9, 2021), and finally by the Supreme Court (order dated February 2, 2024).

The NCLT further observed that the corporate debtor was no longer engaged in any construction or development activity and had no role in the project after its registration was revoked. The Bench recorded that the petitioners, who were also parties to the RERA proceedings, had complete knowledge that the SLB Welfare Association was duly authorized to undertake the construction work. It emphasized that the insolvency petition was clearly intended to derail and delay the ongoing construction work rather than to resolve the insolvency of the corporate debtor.

In its findings, the Tribunal held that the Section 7 application was filed with fraudulent and malicious intent, attracting the provisions of Section 65 of the IBC, which prohibits the filing of insolvency petitions with ulterior motives. The Bench observed that insolvency proceedings cannot be used as a tool to disrupt or obstruct regulatory processes lawfully undertaken under RERA. However, keeping in view the fact that the petitioners were homebuyers who had already suffered due to delay, the Bench refrained from imposing any monetary penalty under Section 65.

In its concluding observations, the Bench stated that “it is evident that the petition has been filed with fraudulent and malicious intent and not for the resolution of the corporate debtor.” Accordingly, the Section 7 petition was dismissed, and the application under Section 65 filed by SLB Welfare Association was allowed.

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The order reaffirms the principle that insolvency proceedings under the IBC cannot be invoked to frustrate or interfere with the statutory mechanisms established under RERA for completion of stalled real estate projects. The Tribunal made it clear that once the regulatory authority has taken charge and vested the completion of the project with an authorized association, any attempt to reinitiate insolvency proceedings against the original developer amounts to abuse of the process of law.

Appearance

For the Applicant: Mr. Rajat Chaudhary, Ms. Aastha Vishnoi, Ms. Kanika Balhara, Ms. Suraksha Mandhyan, Advs.

For the Respondents: Mr. Satish Rai, Mr. Abhay Gupta, Mr. Charis Yadav, Advs.

Cause Title: Mr. Inder Sain & 72 Ors. v. PSA Impex Private Limited

Case No: IB-101(ND)/2025

Coram: Shri Bachu Venkat Balaram Das (Member-Judicial), Dr. Sanjeev Ranjan (Member-Technical)