Back
2025 Supreme(Online)(NCLAT) 461
NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI
ASHOK BHUSHAN, J
Sumer Radius Realty Pvt. Ltd. – Appellant
Versus
Avenure 54 Welfare Association – Respondent
Company Appeal (AT) (Insolvency) No. 1572 of 2025 | Company Appeal (AT) (Insolvency) No. 1573 of 2025
For the Appellants:Mr. Krishnendu Dutta, Sr. Advocate, Ms.Anne Mathew, Mr. Yash Tandon, Mr. Harshit, Mr. Jashan Vir Singh
For the Respondents: Ms. Meghna Rao, Mr. Sujit Lahoti, Ms. Akshta Shah, Mr. Harish Karodia, Ms. Nidhi Jain
For Intervenors:Mr. Abhijeet Sinha, Sr. Advocate, Ms. Nitya Shah, Mr. Kinnar Shah, Mr. Rhythm Buaria, Ms. Aditi Bhargava, Mr. Aridaman Raghav
A registered society cannot file an insolvency application as a financial creditor unless properly authorized by its members; the opportunity to cure deficiencies in authorization was mandated.
Headnote:(A) Insolvency & Bankruptcy Code, 2016 - Section 7 - Maintainability of application - Avenue 54 Welfare Association, a registered society of flat purchasers filed Section 7 application for corporate insolvency resolution process due to default in possession - The adjudicating authority dismissed the application on grounds of lack of authorisation and it being non-financial creditor - The appeals were filed contending the decision was erroneous - The court found that while the registered society was not a financial creditor as defined, the opportunity to submit individual affidavits from homebuyers was not granted, and the defect in authorisation should be remedied. (Paras 4, 20, 24)
(B) Application by financial creditor - Compliance with statutory requirements - The definition and qualifications for financial creditors, and the necessity for collective authorisation by the members of the association to file the application on behalf of 98 affected flat buyers was essential for maintainability under the IBC. (Paras 11-12, 20-22)
Facts of the case:
The Avenue 54 Welfare Association filed for insolvency resolution against Sumer Buildcorp Pvt. Ltd. and Sumer Radius Realty Pvt. Ltd., alleging defaults in possession related to a housing project, totaling a claim of ₹203,27,66,369/-.
Issues: The central issue revolved around the interpretation of the maintainability of Section 7 applications and the status of the Avenue 54 Welfare Association as a financial creditor.
Findings of Court:
While the association's application was deemed maintainable, the appellants were granted 7 days to remedy the authorisation issue.
Ratio Decidendi: The court reinforced that the statutory requirements for filing under Section 7 mandate clear authorisation by eligible creditors and that any standards set forth by the enabling acts and notifications must be adhered to.
Result: The adjudicating authority may proceed to hear the Section 7 application post-remedy of authorisation defects.
| Table of Content |
|---|
| 1. appeals challenging dismissal of insolvency application. (Para 1 , 2) |
| 2. maintainability of section 7 application depends on debtor's financial status. (Para 4 , 20) |
| 3. dispute over authorisation poses procedural concerns in insolvency filing. (Para 5 , 18) |
| 4. statutory compliance is essential for valid application initiation. (Para 11 , 13 , 22) |
| 5. resolution permits further action to rectify application defects. (Para 24) |
ORDER
ASHOK BHUSHAN, J.
These two appeals have been filed, challenging the common order dated 12.09.2025 passed by the adjudicating authority (National Company Law Tribunal, Court – V, Mumbai Bench) in I.A. No.5195/2024 & I.A. No.6034/2024 filed in C.P. (IB) No.284/MB/2024. By the impugned order, the above applications filed by the appellants, the corporate debtors, praying for dismissal of the C.P. IB 284/MB/2024 filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code’ or the ‘IBC’), by the Avenue 54 Welfare Association have been dismissed by the adjudicating authority, aggrieved by which order, these appeals have been filed.
2. Brief facts necessary to be noticed for deciding the appeal are:
i. Section 7 application was filed by Avenue 54 welfare Association, a registered society of flat purchasers in the project known as “Avenue 54” at Santacruz West, Mumbai.
ii. The members of the Avenue 54 Welfare Association who had purchased 98 flats in the project got a society registered of the flat buyers namely Avenue 54 Welfare Association. In the Section 7 application, the Sumer Buildcorp Private Limited as corporate debtor No. 1 and Sumer Radius Reality Private Limited as corporate debtor No. 2, alleging default by the corporate debtor in handing over the possession. Amount claimed to be in default was ₹203,27,66,369/- only.
iii. On the Section 7 application filed by Avenue 54 Welfare Association, notices were issued to both the corporate debtors who are appellants before us. An additional affidavit was also filed by the applicant, respondent on 04.06.2024. An I.A.5195/2024 dated 23.09.2024 was filed by the Sumer Radius Reality Private Ltd. in the C.P. (IB) 284/2024 praying for dismissal of the company petition in limine. A similar application was filed by Sumer Buildcorp Private Limited being I.A.6034/2024, praying for dismissal of the company petition in limine. In the applications reply was filed by the respondent. Application came for consideration before the adjudicating authority on 17.06.2025.
iv. Learned counsel for the respondent (applicants of Section 7 application) offered to file individual affidavits of the homebuyers regarding authorisation to the applicant in the present company petition which request was objected by counsel for the corporate debtor, the adjudicating authority did not accede to the request and directed both the parties to file written submissions. Adjudicating authority by the impugned order, rejected both the applications.
3. We have learned Sr. counsels Mr. Arun Kathpalia & Mr. Krishnendu Dutta appearing for the appellants as well as learned Sr. counsel Mr. Abhijeet Sinha appearing for the respondent.
4. Learned counsel for the appellant in support of the application submitted that Section 7 application being C.P. (IB) 284/MB/2024 was filed by Avenue 54 Welfare Association, which is a registered society. Application filed by the Avenue 54 Welfare Association was not maintainable since Avenue 54 Welfare Association is not the financial creditor of the corporate debtor. Under Section 7 of the IBC, right is given to the financial creditor to file the application singly or jointly. Learned counsel further submitted that vide notification dated 27.02.2019 issued in exercise of power conferred under sub-Section (1) of Section 7 of the IBC, Central Government has notified 5 other entities who may file the application and the registered society i.e., respondent herein is not covered by any of the clauses as notified by the C
