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The Supreme Court has upheld corporate insolvency proceedings against two real estate companies linked to a stalled commercial project in Greater Noida, dismissing appeals by their former directors. The case was initiated by over 140 allottees who said possession was promised years ago but the project remained incomplete and unusable. The court agreed that financial debt and default were clearly established and ruled that claims of partial completion or limited possession could not block insolvency proceedings already admitted by insolvency tribunals.
The Supreme Court has upheld the initiation of corporate insolvency resolution proceedings against Bhasin Infotech and Infrastructure Pvt. Ltd. and Grand Venezia Commercial Towers Pvt. Ltd., both associated with a delayed real estate project in Greater Noida. The ruling came after the court rejected appeals filed by the companies former directors challenging earlier tribunal orders that admitted the insolvency plea filed by affected allottees. Advertisement
The dispute relates to the Grand Venezia Commercial Tower, where buyers had booked commercial units after being assured timely possession and regular returns. The allottees stated that despite making substantial payments, the project remained incomplete for years and was not fit for occupation. They also pointed out that assured returns stopped in 2014 and that no valid completion certificate had been issued by the Uttar Pradesh State Industrial Development Authority.
The appellants argued that the project was largely completed and that possession had been offered to several allottees. However, the Supreme Court agreed with the findings of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) that these claims were not supported by records. The court observed that possession without statutory approvals and completion certification could not be treated as valid delivery under law.
The insolvency petition was filed in 2021 by 141 allottees, who were recognised as financial creditors under the Insolvency and Bankruptcy Code. The NCLT admitted the plea in 2023 after concluding that a clear financial debt existed and that default had occurred due to non-delivery of units despite receipt of consideration.
The Supreme Court held that once financial debt and default are established, insolvency proceedings cannot be stalled on the ground that construction is near completion or that limited possession has been claimed. It further noted that the absence of a completion certificate and continued non-usability of the premises were key indicators of default.
By dismissing the civil appeals, the court allowed the insolvency process to continue as per law, reaffirming that homebuyers and commercial allottees are entitled to seek relief under insolvency provisions when promised delivery timelines are not honoured.
Source PTI
FAQ
Q1. What did the Supreme Court decide in the Greater Noida real estate insolvency 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 confirmed earlier orders passed by the NCLT and NCLAT admitting the insolvency petitions filed by affected allottees. This allows the insolvency process against the two companies to continue under the Insolvency and Bankruptcy Code.
Q2. What is the background of the dispute involving these real estate companies?
The case relates to the Grand Venezia Commercial Tower project in Greater Noida, where buyers had booked commercial units based on assurances of timely possession and assured returns. According to the allottees, despite making substantial payments, the project remained incomplete for several years and was not fit for use. Assured returns stopped around 2014, and the project did not receive a valid completion certificate from the Uttar Pradesh State Industrial Development Authority.
Q3. Who filed the insolvency petition and on what grounds?
The insolvency petition was filed in 2021 by 141 allottees who were recognised as financial creditors under the Insolvency and Bankruptcy Code. They argued that a clear financial debt existed because money had been paid for units that were never delivered within the promised timelines. The continued non-completion of the project and the absence of a completion certificate were cited as evidence of default.
Q4. What arguments were raised by the former directors of the companies?
The former directors contended that the project was largely complete and that possession had been offered to several buyers. They argued that insolvency proceedings should not be allowed when construction was close to completion. However, these claims were not supported by documentary records, and no statutory approvals or valid completion certificate were produced to substantiate lawful possession.
Q5. Why did the Supreme Court reject the appeals against insolvency proceedings?
The Supreme Court agreed with the findings of the NCLT and NCLAT that financial debt and default were clearly established. It held that possession offered without mandatory statutory approvals cannot be considered valid delivery under law. The court further ruled that insolvency proceedings cannot be blocked merely on the claim that construction is near completion or that limited possession has been offered without legal certification.
Q6. What is the significance of this ruling for homebuyers and commercial allottees?
The ruling reinforces the right of homebuyers and commercial allottees to seek relief under insolvency laws when developers fail to honour delivery commitments. It clarifies that incomplete projects, absence of completion certificates, and non-usability of premises are strong indicators of default. The judgment strengthens buyer protection by confirming that insolvency remedies remain available even if developers claim partial completion.
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