4 January 2024

Whether A Joint Application Can Be Made Against Three Separate Corporate Entities Involved In A Real Estate Project For Initiating CIRP?

Clasis Law


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Anand Infoedge was allotted a land by the Noida Industrial Development Authority vide Lease deed dated August 21, 2008.
India Real Estate and Construction
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Mist Avenue Pvt. Ltd. ("Mist Avenue"), Mist Direct Sales Pvt. Ltd. ("Mist Direct") and Anand Infoedge Pvt. Ltd. ("Anand Infoedge") (collectively "Appellants") filed three separate Appeals1 before the Hon'ble National Company Law Appellate Tribunal, New Delhi ("NCLAT") challenging the order dated October 21, 2022 ("Impugned Order") passed by the National Company Law Tribunal, New Delhi Bench ("NCLT"). By the Impugned Order, the NCLT held that the application filed under Section 7 of Insolvency and Bankruptcy Code, 2016 ("IBC") by Nitin Batra & Ors. ("Respondents"), being the home buyers is maintainable.


  • Anand Infoedge was allotted a land by the Noida Industrial Development Authority vide Lease deed dated August 21, 2008. Anand Infoedge entered into a Collaboration Agreement with Mist Avenue ("First Collaboration Agreement") which was made effective from October 26, 2012. Under the First Collaboration Agreement, Mist Avenue was entitled to develop and sell all units constructed by themselves and Anand Infoedge. Subsequently, Mist Avenue entered into Builder Buyers' Agreement with the buyers/allottees.
  • On July 27, 2017, the First Collaboration Agreement was cancelled and another collaboration agreement was entered into between Anand Infoedge, Mist Avenue and Mist Direct ("Second Collaboration Agreement"). Under the Second Collaboration Agreement, Mist Avenue granted development construction rights to Mist Direct.
  • As the project could not be completed, UPRERA vide its order dated December 07, 2019 cancelled the project registration and hence the allottees / Respondents filed a joint application under Section 7 of the UBC before the Hon'ble NCLT for initiating Corporate Insolvency Resolution Process ("CIRP") against the Appellants.
  • On hearing both the parties, the Hon'ble NCLT passed the Impugned Order wherein the application under Section 7 was admitted for CIRP against all the Appellants. Aggrieved by the Impugned Order, the Appellants filed three separate appeals before the Hon'ble NCLAT.

Issue before the Hon'ble NCLAT:

Amongst other issues, the main issue dealt by the Hon'ble NCLAT was whether a joint application under Section 7 of IBC is maintainable against three Appellants being the separate corporate entities?


1) On behalf of the Appellants:

a. The Hon'ble NCLT cannot initiate proceedings against three companies simultaneously in the case where debt is due against one company and the default has been done by another company.

b. The Respondents failed to prove any relationship between the Appellants and Respondents being Corporate Debtor and Financial Debtor as there was no commercial effect of borrowing between them.

c. The three Appellant companies did not pass any test for consolidating the CIRP of more than one Corporate Debtor as mentioned in the case of Radico Khaitan Ltd. vs BT&FC Pvt. Ltd.2. Under the said judgment, the Hon'ble NCLAT had laid down various parameters such as common control, common directors, common assets and liabilities, pooling of resources, etc. in order to prove that the corporate debtors were interconnected.

2) On behalf of the Respondents:

a. All three Respondents in Section 7 application were interconnected and were jointly developing the project. Therefore, CIRP application filed by them was duly maintainable.

b. The interest of the homebuyers/ Respondents would not be protected if any one of the Appellants was not before the Hon'ble NCLT or not party to the insolvency process.


  • All three Appellants had joined hands together to develop the project and accordingly had undertaken several responsibilities towards the allottees.
  • In order to revive the project with a successful resolution, all three Appellants had to be part of the CIRP as each of the Appellants are necessary ingredient for any resolution which may help the allottees to receive their units.
  • In the matter of Mamatha vs AMB Infrabuild Pvt. Ltd. & Ors.3 and Edelweiss Asset Reconstruction Company Ltd. vs Sachet Infrastructure Pvt. Ltd.4, the Hon'ble NCLAT had held that consolidated / joint CIRP can be initiated against one or more corporate debtors who have come together to develop a project.
  • The Hon'ble NCLAT distinguished the judgment of Radico Khaitan (Supra) on the grounds that it was not a real estate project case and hence cannot be applied to the facts of the present case.


The Hon'ble NCLAT held that the application filed under Section 7 of the IBC against the Appellants was rightly admitted as all three Appellants were part of a common real estate project and were intrinsically interwoven in the said project. Without making party to all three corporate entities, no resolution process would be achieved successfully.


1. Company Appeal (AT) (INS) No. 46 of 2023

2.[2] C.A. (AT) Ins. No. 919 of 2020

3. C.A. (AT) Ins. No. 155 of 2018

4. C.A. (AT) Ins. No. 377 of 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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