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The Supreme Court has upheld insolvency proceedings against Bhasin Infotech and Infrastructure Pvt Ltd and Grand Venezia Commercial Towers Pvt Ltd over delays and non-delivery of a Greater Noida project. Dismissing appeals filed by former directors, the court agreed with findings of the insolvency tribunals that the developers failed to hand over functional units and did not obtain mandatory completion approvals. The case was initiated by 141 allottees who had paid for 103 units but neither received lawful possession nor continued assured returns promised by the developers.
The Supreme Court has upheld the initiation of corporate insolvency resolution proceedings against Bhasin Infotech and Infrastructure Private Limited and Grand Venezia Commercial Towers Private Limited, relating to a delayed real estate project in Greater Noida. A bench comprising Justices Sanjay Kumar and K Vinod Chandran dismissed appeals filed by the former directors of the companies, including Satinder Singh Bhasin, and found no legal fault in the earlier tribunal orders. Advertisement
The apex court agreed with the findings of the National Company Law Tribunal (NCLT), which had admitted the insolvency petition filed by 141 allottees covering 103 units. This decision was later upheld by the National Company Law Appellate Tribunal (NCLAT). The allottees had approached the tribunal stating that they had paid substantial amounts for units that were neither completed nor legally fit for occupation.
The developers had argued that construction was complete and that possession had been offered or handed over to some buyers. However, the court noted that these claims were unsupported, as the project lacked mandatory completion certificates from the Uttar Pradesh State Industrial Development Authority. Without such approvals, the court held that possession could not be considered valid or lawful.
The bench also took note of the fact that possession was originally promised by May 2013, but the project remained incomplete years later. In addition, the developers had offered assured returns to investors starting in 2014, which were later stopped. The court observed that the failure to deliver completed units, along with discontinuation of promised returns, clearly established default under the Insolvency and Bankruptcy Code.
The Supreme Court rejected the argument that insolvency proceedings were not maintainable on the ground that some units were partially constructed or occupied. It reiterated that buyers qualify as financial creditors when payments are made against promised delivery, and failure to meet those obligations gives rise to insolvency action.
By affirming the NCLT and NCLAT orders, the court reinforced that real estate developers must comply with regulatory approvals and contractual commitments before claiming project completion. The judgment also strengthens the legal position of homebuyers seeking remedy under insolvency law when projects remain stalled for prolonged periods.
Source PTI
FAQ
Q1. What did the Supreme Court decide in the Greater Noida real estate case?
The Supreme Court upheld the initiation of corporate insolvency resolution proceedings against Bhasin Infotech and Infrastructure Pvt Ltd and Grand Venezia Commercial Towers Pvt Ltd. The court dismissed appeals filed by the former directors of the companies and found no legal error in the orders passed earlier by the insolvency tribunals. The ruling confirms that the insolvency process against the developers will continue under the Insolvency and Bankruptcy Code.
Q2. Who approached the insolvency tribunal and on what grounds?
A total of 141 allottees, covering 103 commercial units in the Greater Noida project, approached the National Company Law Tribunal. They stated that they had paid substantial amounts for their units but neither received lawful possession nor functional premises. The allottees also highlighted prolonged delays and non-fulfilment of contractual obligations by the developers.
Q3. Why did the court reject the developers claim that possession was offered?
The developers argued that construction was complete and that possession had been offered or handed over to some buyers. However, the Supreme Court noted that the project had not received mandatory completion certificates from the Uttar Pradesh State Industrial Development Authority. In the absence of these statutory approvals, the court held that any claim of possession could not be treated as valid or legally enforceable.
Q4. How did delays and assured returns influence the court's decision?
The court observed that possession was originally promised by May 2013, but the project remained incomplete for several years beyond that deadline. Additionally, the developers had promised assured returns to investors from 2014, which were later discontinued. The failure to deliver completed units along with the stoppage of assured returns was seen as clear evidence of default under insolvency law.
Q5. What was the court's view on buyers being treated as financial creditors?
The Supreme Court reiterated that homebuyers and unit allottees qualify as financial creditors when payments are made against a promise of delivery. It rejected the argument that insolvency proceedings were not maintainable because some units were partially constructed or occupied. The court clarified that failure to meet delivery obligations gives buyers the right to initiate insolvency action.
Q6. Why is this judgment significant for the real estate sector?
By affirming the NCLT and NCLAT orders, the Supreme Court reinforced that real estate developers must obtain regulatory approvals and honour contractual commitments before claiming project completion. The ruling strengthens the legal position of homebuyers and investors, confirming that insolvency law remains a valid remedy when projects are delayed for long periods and obligations are not fulfilled.
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