Anirudh Associates
The intersection of the Insolvency and Bankruptcy Code, 2016 (IBC), the Real Estate (Regulation and Development) Act (RERA), and Companies Act, 2013 — an intersection that has become one of the most litigated areas in Indian real estate over the last few years. This post distils two of the most significant recent judicial developments and innovations in that space: the rise of joint CIRP against linked corporate entities, and the emerging doctrine of project-wise "carving out" of insolvency proceedings.
Indian real estate is rarely built by a single, clean corporate entity. A township may be owned by a landholding Special Purpose Vehicle (SPV), constructed by a separate developer company, marketed by yet another entity, and financed across dozens of unrelated projects under one large corporate group. This structuring creates two opposites but equally serious problems for homebuyers when insolvency enters the picture, providing getaway for relevant homebuyers on the basis of their circumstances.
Distinct Developing Company and Land-owning Company: When a project stalls, homebuyers often discover that the entity they signed their Builder-Buyer's Agreement with is not the same entity that owns the land or controls the money — making it hard to hold anyone fully accountable for the purposes of Section 7 of the IBC.
Problem two: When a single developer runs multiple, unrelated projects, a default tied to just one project can trigger a company-wide Corporate Insolvency Resolution Process (CIRP) — freezing even fully constructed, near-handover projects that have nothing to do with the default in question.
Over the past few years, the National Company Law Appellate Tribunal (NCLAT) and the Hon’ble Supreme Court of India have developed two complementary answers: Joint CIRP, which lets homebuyers proceed jointly against intrinsically linked entities, and Project-Wise Carve-Outs, which confine CIRP's effects to the specific project connected to the default. Together, they reflect a consistent judicial philosophy — substance over corporate form, and project-centric resolution over blanket, company-wide consequences.
The multi-company trap.
Builders routinely put forth that a Section 7 application is "not maintainable" because the allottee has no privity of contract with the landowning Company, because each company is a separate legal entity, or because the statutory threshold — 100 allottees or 10% of allottees, whichever is lower, under the second proviso to Section 7(1) — should be computed only against a narrower, artificially inflated denominator. Left unchecked, these defences would force homebuyers to litigate simultaneously against multiple shell entities, none of which alone controls the land, the money, or the construction.
Under the IBC, admission of CIRP triggers a Section 14 moratorium over the entire corporate debtor. For a group running fifty or more projects, one debenture trustee's claim tied to a single plot, or a handful of defaulting allottees in one project, could theoretically sweep every other project — including fully paid-for, near-completion flats — into the same insolvency process. This is exactly what played out in the case of Flat Buyers Association vs. Umang Realtech, and later, on a much larger scale, in disputes involving projects worth thousands of crores across multiple cities.
Common root of the problem: The IBC's insolvency framework is built around the corporate person, while real estate businesses are, in economic reality, organised project-by-project. Rigid application of "one company, one insolvency" either lets developers escape accountability by hiding behind structure, or unfairly punish the innocent homebuyers of unrelated, solvent projects.
Three rulings have progressively navigated through this loophole. In Satyabrata Mitra v. Earth Towne Infrastructure Pvt. Ltd , the Hon’ble NCLAT held that the 100-allottee/10% threshold must be computed against the relevant corporate debtor's own share of the project, not artificially inflated by counting the entire township's allottee base. In Mist Avenue Pvt. Ltd. v. Nitin Batra , the Hon’ble NCLAT confirmed that a single, consolidated Section 7 application against multiple corporate debtors — a landowner and successive developers — is maintainable where the entities jointly undertook the project. Most significantly, in Satinder Singh Bhasin v. Col. Gautam Mullick (2026 INSC 104), concerning the Grand Venezia Commercial Tower, the Hon’ble Supreme Court upheld a joint CIRP against a developer and its marketing entity, finding them "intrinsically linked" through common directors, interchangeable correspondence, and an agency-style marketing arrangement.
On project-wise carve-outs, the doctrine traces back to Flat Buyers Association, Winter Hills-77 v. Umang Realtech Pvt. Ltd. , where the tribunal held that CIRP triggered by one project's allottees or lenders must be confined to that project alone. This reasoning was reaffirmed in Gagan Tandon v. IL&FS Financial Services and applied again in 2026 in two major appeals: Surender Singh (Vatika Limited) v. IDBI Trusteeship , where NCLAT confined CIRP strictly to the specific project tied to a debenture trustee's security rather than the developer's entire ₹18,000 crore, 58-project portfolio; and Navin M. Raheja v. Vipul Jain & Ors. , where CIRP was confined to the "Raheja Shilas (Low Rise)" project alone. The Supreme Court's 2025 ruling in Mansi Brar Fernandes v. Shubha Sharma reinforced this philosophy, holding that IBC in the real estate context is a forum of last resort meant to secure completion of viable projects, not a debt-recovery tool — and that resolution should ordinarily proceed project-wise.
For allottees, these developments translate into concrete, practical protection:
Real estate insolvency law in India continues to evolve rapidly in favour of homebuyers.