Legal Provisions Involved: Section 7 of the Insolvency and Bankruptcy Code, 2016.

Judgment by: Supreme Court of India.

Judge/Bench: Justice Sanjay Kumar and Justice K. Vinod Chandran.

Facts

Buyers had booked units in a commercial project called Grand Venezia. They paid money but did not receive proper possession of their units. The project was connected to two companies. The buyers filed an insolvency case saying there was default. The NCLT started the insolvency process against both companies. The former directors challenged this, saying the buildings were complete and possession had already been offered.

Key Legal Provisions

Section 7 of the Insolvency and Bankruptcy Code, 2016.

Issues Raised

Can two related companies be put into one joint insolvency process? Was there really a default if possession letters were given?

Arguments of the case

The companies argued that they were separate and had completed construction. The buyers on the other hand argued that no proper occupancy certificate was issued and possession was not legally valid.

Judgment

The Supreme Court agreed with the buyers. It stated that both companies were closely connected in the same project and responsible together. Since legal possession was not given, default was clear. A joint insolvency process was correct.

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