Joint Section 7 IBC Petition Against Interlinked Real-Estate Companies; Threshold Reckoned at Filing; Pre-Registration Party Substitution Permissible

Case: SATINDER SINGH BHASIN v. COL GAUTAM MULLICK & ORS (with connected appeals)
Citation: 2026 INSC 104
Court: Supreme Court of India (Civil Appellate Jurisdiction)
Date: 02-02-2026 (judgment signed January 2, 2026)
Bench: Sanjay Kumar, J.; K. Vinod Chandran, J.

1. Introduction

The appeals arose from initiation of the corporate insolvency resolution process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) against two companies connected with a composite real-estate project: (i) M/s. Grand Venezia Commercial Towers Private Limited (“Grand Venezia Ltd.”) and (ii) M/s. Bhasin Infotech and Infrastructure Private Limited (“Bhasin Ltd.”). A group of 141 individuals (treated as 103 unit-allottees after accounting for joint allotments) filed Company Petition IB (IBC) No. 646/PB/2021 claiming financial creditor status as allottees of office spaces in “Grand Venezia Commercial Tower”.

The allottees alleged prolonged non-delivery of legally valid possession: no final completion/occupancy certification for their portion, non-execution of mandatory tripartite sublease deeds involving the lessor authority (UPSIDA), and stoppage of “assured returns” since 2014. The corporate side contended construction was complete, that allottees were in default of dues/stamp duty, and that a single Section 7 petition could not be maintained against two distinct corporate entities.

The Supreme Court was required to address (a) the “100-allottee/10%” threshold for real-estate allottees under the second proviso to Section 7(1), (b) whether substitutions in the array of allottees after initial filing (but before registration) vitiated the petition, (c) whether a joint Section 7 petition can proceed against two corporate debtors in a linked real-estate setting, and (d) whether “completion/possession” defenses defeated proof of default.

2. Summary of the Judgment

3. Analysis

3.1 Precedents Cited

(a) Manish Kumar v. Union of India (2021) 5 SCC 1

The Court relied on Manish Kumar v. Union of India to settle the “day of reckoning” for the threshold under the second proviso to Section 7(1). The Supreme Court reiterated that the threshold must be tested on the date of presentation of the Section 7 application, not at hearing/admission, and not by netting out later settlements. This neutralized the appellants’ attempt to argue that only 55 “surviving” claimants remained by admission time.

(b) Surendra Trading Company v. Juggilal Kamlapat Jute Mills Company Limited and others (2017) 16 SCC 143

This precedent was used to explain the procedural status of an application that is defective and returned. The Court extracted the principle that until defects are removed, an application under Sections 7, 9 or 10 is not to be treated as an application validly filed (in the sense of being complete and entertainable). This supported the conclusion that amendments/substitutions while curing defects did not constitute impermissible post-filing tampering.

(c) Gurdial Singh And Others v. Raj Kumar Aneja And Others (2002) 2 SCC 445

The appellants invoked Gurdial Singh And Others v. Raj Kumar Aneja And Others for the proposition that once a pleading is filed, it forms part of the court record and cannot be modified without leave. The Supreme Court distinguished it: NCLT procedure under Rule 28 contemplates return for rectification/amendment prior to registration; hence the “once filed, immutable without leave” logic did not apply on these facts.

(d) Edelweiss Asset Reconstruction Company Limited v. Sachet Infrastructure Private Limited 2019 SCC OnLine NCLAT 592

The NCLT had relied on this NCLAT decision to support consolidated treatment of related corporate debtors (a group insolvency approach for value maximisation). The Supreme Court added weight by noting that a challenge to the NCLAT’s approach was dismissed by the Supreme Court on 10.02.2020 (Civil Appeal (Diary) No. 1010 of 2020), thereby treating the principle as judicially accepted at least at the level of outcome.

(e) Mist Avenue Pvt Ltd v. Nitin Batra and others (2025) 261 Comp Cas 516 = 2023 SCC OnLine NCLAT 29

The NCLAT’s reasoning in Mist Avenue Pvt Ltd v. Nitin Batra and others was endorsed for the proposition that where multiple companies are closely connected with construction and implementation of a real-estate project, a joint petition may be maintainable so that allottees are not left remediless and the project can be resolved holistically.

(f) Mamatha vs. Amb Infrabuild P. Ltd. and others (2019) 5 Comp Cas-OL 130 = 2018 SCC Online NCLAT 785; and AMB Infrabuild P. Ltd. v. Mamatha and another 2019 SCC Online SC 2410

The Court used this pair to reinforce that, in real-estate collaborations, Section 7 proceedings may lie jointly against collaborating corporate debtors rather than forcing allottees to pick one entity. The Supreme Court noted the confirmation of the NCLAT position by dismissal of the civil appeal in AMB Infrabuild P. Ltd. v. Mamatha and another.

3.2 Legal Reasoning

(i) Threshold under the second proviso to Section 7(1): filing-date test and evidentiary discipline

The Court treated the threshold requirement as a jurisdictional gateway but fixed its temporal point: the date of presentation. Attempts to reduce the petitioning group by pointing to alleged possession/refunds/settlements by admission time were rejected on two independent tracks:

• Principle: Manish Kumar v. Union of India fixes the relevant date at filing.
• Proof: The NCLT/NCLAT found no documentary basis for the claimed pre-filing settlements; the Supreme Court declined to disturb that factual evaluation.

(ii) Substitution of petitioners while curing defects: Rule 28 NCLT Rules as the pivot

A significant clarification emerges from the Court’s reading of Rule 28 of the National Company Law Tribunal Rules, 2016: because the petition is scrutinized, may be returned for compliance, and is “registered” only after defects are cured, the procedural system itself contemplates amendment in that interregnum. The Supreme Court expressly relied on Rule 28(3), which allows “rectification or amendment” of a returned document, and concluded:

• mere initial filing does not automatically place a final, immutable pleading on the tribunal’s registered record; and
• changes made before registration (Rule 28(4)) do not require leave and are not an abuse of process.

The Court harmonized this with Surendra Trading Company v. Juggilal Kamlapat Jute Mills Company Limited and others, emphasizing that completeness is a prerequisite to valid entertainment.

(iii) Maintainability of a single Section 7 petition against two corporate debtors: “intrinsic linkage” and joint answerability

The Court accepted that the Code does not expressly bar a joint petition and treated the issue as fact-sensitive: whether the companies were, in substance, entwined in obligations to allottees and in execution of the same project.

The following indicia were decisive:

• UPSIDA’s allotment and lease framework anchored the project in Bhasin Ltd., but Grand Venezia Ltd. entered through marketing/collection arrangements (Joint Venture Agreement dated 14.12.2009) and later an asserted bulk purchase of units.
• Common directors for a period; interchangeable communications; receipts and allotment-related paperwork reflecting both names.
• Grand Venezia Ltd.’s own reply acknowledged its role under the 14.12.2009 agreement (even as the Court cast doubt on its claimed “reputation” given incorporation timing).

On this record, the Court concluded there was “no possibility” for either company to deny joint liability to allottees, making a joint insolvency approach appropriate for value maximisation and coherent resolution—consistent with the thrust of Edelweiss Asset Reconstruction Company Limited v. Sachet Infrastructure Private Limited, Mist Avenue Pvt Ltd v. Nitin Batra and others, and Mamatha vs. Amb Infrabuild P. Ltd. and others.

(iv) “Completion” defenses in real-estate CIRP: legal possession vs paper possession

The Court’s default analysis turned on the legal architecture governing occupation and transfer in a leasehold industrial authority project:

• UPSIDA’s allotment letter (05.08.2006) required tripartite sublease deeds (UPSIDA + developer + allottee), and made completion certification a precondition.
• UPSIDA Building Regulations, 2004 (Regulation 2.16.0) required an Occupancy Certificate in the prescribed format (Appendix-11) before occupation; none existed.
• “Notional possession” letters and even “physical possession” letters could not override the contractual/statutory prohibition against possession absent tripartite deeds and requisite certification.

Importantly, the Court accepted inspection-based materials (IRP status report, Observer’s Report, UPSIDA report) because the appellants had secured an interim stay by asserting completion; the appellate forum therefore tested the factual claim during pendency. Those reports demonstrated substantial incompletion (upper floors unconstructed, basic amenities missing, fire safety absent), undercutting the completion narrative.

3.3 Impact

• Procedural clarity for Section 7 real-estate filings: The decision operationalizes Rule 28 NCLT Rules by recognizing a pre-registration “curing/amendment” window, reducing technical knock-outs where party arrays change while defects are cured.
• Group/connected-entity real-estate insolvency: It strengthens the jurisprudential acceptability of joint petitions (or joint treatment) where corporate structures split development, marketing, and sales across entities—common in real-estate projects.
• Substance over form in “possession” disputes: It signals that “possession” defenses will be tested against statutory/contractual conditions (occupancy certification, authority approvals, tripartite instruments), not merely developer-issued letters.
• Threshold litigation containment: By reaffirming the filing-date test and requiring proof of pre-filing settlements, it discourages post-facto dilution arguments intended to defeat the second proviso to Section 7(1).

4. Complex Concepts Simplified

• Section 7 IBC (real-estate allottees as financial creditors): Allottees can trigger CIRP like lenders, but only if a minimum group (100 or 10% of allottees, whichever is less) applies together.
• “Threshold”: The minimum number of allottees required to file. Here, it is checked on the date of filing, not later.
• “Registered” petition under NCLT Rules: A petition returned for defects is not yet treated as properly on record for all purposes; Rule 28 allows rectification/amendment before the Registrar registers it after compliance.
• Tripartite sublease deed: In leasehold authority land, the allottee often becomes a sublessee only when the authority (lessor) joins the transfer with the developer; without it, the allottee’s title/possession may be legally insecure.
• Occupancy Certificate: Official certification that a building is fit to be occupied; without it, occupation/handing over may be illegal even if some construction exists.
• Joint/Group insolvency approach: Treating connected companies together where splitting proceedings would frustrate resolution of a single integrated project and prejudice stakeholders.

5. Conclusion

The Supreme Court’s ruling consolidates three practical rules for real-estate insolvency under Section 7: (1) the allottee-threshold is fixed at filing; (2) substitutions while curing defects, before registration under Rule 28, are permissible and not abusive; and (3) a joint Section 7 petition can lie against two corporate entities where the record shows intrinsic linkage and joint answerability to allottees in the same project. The Court also underscored that “possession” must be legally effective—aligned with authority regulations and tripartite documentation—before it can defeat an allottee’s claim of default.