The National Company Law Tribunal (NCLT), New Delhi Bench, has dismissed an application filed by a group of 20 homebuyers seeking significant procedural deviations in the ongoing Corporate Insolvency Resolution Process (CIRP) of Spaze Towers Private Limited. The tribunal, presided over by Judicial Member Mahendra Khandelwal and Technical Member Atul Chaturvedi, rejected demands for the appointment of project-specific observers, an additional forensic audit, and the disclosure of sensitive financial records belonging to other creditors.

The Applicants, who represent a segment of homebuyers associated with the "Spaze Arrow" project, had moved the tribunal under Section 21 and Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016. Their core grievance stemmed from the assertion that the Spaze Arrow project, which remains incomplete, is fundamentally distinct from the other real estate projects under the Corporate Debtor’s umbrella. The homebuyers argued that their investment, which has yielded no tangible asset or benefit, warrants a separate insolvency framework to prevent them from being treated identically to allottees of more advanced projects.

However, the tribunal maintained a firm stance on the unity of the insolvency estate. The court clarified that the CIRP, initiated on October 21, 2024, encompasses the entirety of Spaze Towers Private Limited as a single entity. Attempts to compartmentalize the proceedings to isolate the Spaze Arrow project have been systematically rejected in earlier stages, including by the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court of India.

Rejection of Segregated Representation and Audit Demands

The Applicants had requested the appointment of a dedicated observer or authorized representative specifically for the Spaze Arrow project, or a bifurcation of representation between that project and the others. The tribunal found no merit in these requests, noting that the statutory mechanisms provided under the IBC and the CIRP Regulations, specifically Regulations 4A, 8A, and 16A, provide for the collective representation of a class of creditors.

The tribunal observed that the homebuyers had already participated in the selection process for an authorized representative, resulting in the confirmation of Mr. Shaikh Nafis Anjum by the tribunal on December 9, 2024. The court found no evidence that the current representative had failed to fulfill his statutory duties. Furthermore, while the court acknowledged the introduction of Regulation 16C, which allows for a facilitator for a sub-class of creditors, it concluded that the Applicants had failed to meet the necessary conditions to trigger this provision.

The demand for a fresh forensic audit was similarly dismissed as a redundant exercise. The Resolution Professional (RP) placed on record that the Committee of Creditors (CoC) had already approved and executed a forensic investigation by M/s Kansal Singla & Associates. That audit, which scrutinized the management and financial affairs of the company from April 2019 to October 2024, did not identify any transactions that violated the specified provisions of the IBC, such as those related to preferential, undervalued, or extortionate transactions.

The tribunal emphasized that it could not authorize repeated investigations simply because certain creditors were dissatisfied with the granularity of the existing reports. Highlighting the boundaries of the adjudicating authority, the court noted that the current forensic report had undergone the scrutiny of the CoC and the procedural limitations recorded therein were duly noted.

Privacy and Financial Disclosure Boundaries

One of the most contentious aspects of the application was the demand for the disclosure of individual account statements of all other financial creditors. The Applicants suspected that other claims might be inflated or speculative and sought to verify these figures against the Corporate Debtor’s records. The NCLT took a stern view of this request, stating that no provision within the IBC permits one financial creditor to access the individual financial data of another.

Addressing this request directly, the order stated: "The fact that the Applicants are themselves Financial Creditors does not confer upon them a right to conduct an independent audit of the individual financial affairs of every other creditor." The court further clarified that the Resolution Professional is solely responsible for collating and verifying claims. If an individual creditor possesses evidence that a claim is fraudulent or ineligible, the correct legal path is to present that evidence to the RP for investigation within the established statutory framework, rather than demanding a blanket disclosure of personal financial data.

Limitations on Asset Distribution and Future Litigation

The Applicants further urged the court to secure a sum of ₹23 crore, which they alleged was due to the original petitioners, by ordering the sale of the Corporate Debtor’s former corporate office. The tribunal rejected this proposal, reaffirming that the assets of the Corporate Debtor form a collective insolvency estate that must be managed for the benefit of all stakeholders rather than specific groups.

The court noted: "The assets of the Corporate Debtor form part of the insolvency estate and are required to be dealt with in accordance with the Code and the resolution process." The NCLT underscored that it does not possess the authority to carve out specific assets for the exclusive satisfaction of a sub-group of creditors, as this would violate the priority waterfall mandated by the IBC.

The tribunal also drew attention to the history of litigation surrounding the Corporate Debtor. The Applicants had previously approached the High Court of Delhi with similar requests for forensic audits and investigations, and subsequent applications had been filed before the NCLT itself regarding the production of inspection reports. The court highlighted the necessity for parties to approach the bench with clean hands and to refrain from attempting to bypass the time-bound, statutory processes of the IBC through multiple, overlapping legal filings.

With the dismissal of this application, the insolvency process for Spaze Towers Private Limited is expected to continue under the existing framework. The Resolution Professional remains tasked with fulfilling the mandates of the CoC, ensuring that the verification of claims and the exploration of a viable resolution plan proceed in accordance with the law. By affirming these boundaries, the tribunal has signaled a commitment to maintaining the integrity and collective nature of the resolution process against fragmented, project-specific interventions.