Holding

The NCLAT was correct in admitting the corporate debtor into CIRP and correct in rejecting the society's intervention because the society lacks statutory locus standi.

Summary

The appellant society, representing homebuyers, challenged the NCLAT's order admitting Takshashila Heights India Private Ltd (the corporate debtor) into the Corporate Insolvency Resolution Process (CIRP) on a petition filed by Edelweiss Asset Reconstruction Company Ltd (the financial creditor). The society also contested the NCLAT's rejection of its intervention application, claiming lack of locus standi. The Supreme Court held that once a financial debt and default are established, admission of a Section 7 petition is mandatory and no discretion may be exercised on grounds such as project viability or homebuyer interests. It further ruled that the society, being a maintenance cooperative and not a financial or operational creditor, has no statutory right to intervene in the Section 7 proceedings. Consequently, both the appeal against admission of the corporate debtor and the appeal against the rejection of the society's intervention were dismissed. The Court also issued prospective directions for the Committee of Creditors to disclose allottees' details and record reasons for any decisions affecting possession or liquidation.

Issues considered

Whether the NCLAT was correct in admitting the corporate debtor into the CIRP under Section 7 of the IBC.
Whether the society has locus standi to intervene in the Section 7 proceedings.

Legislation cited

Headnote

Issue for Consideration Issue arose whether the NCLAT was correct in admitting Corporate Debtor into the Corporate Insolvency Resolution Process; and whether the NCLAT was correct in rejecting the Intervention application filed by Code, 2016 – ss.5(8)(f), 7, 7(5)(a) – Corporate Insolvency Resolution Process (CIRP) – Admission of the Corporate Debtor into CIRP – Locus standi to intervene in proceedings u/s.7 – Appellant-Corporate debtor availed financial assistance of Rs.70 crores from

Subjects

Corporate Insolvency Resolution Process (CIRP)Admission of the Corporate Debtor into CIRPInitiation of CIRPLocus standi of societyOne time settlement agreementRecovery mechanismResidential projectHome buyers’ societyInterests of homebuyersFinancial debt existsDefaultDetermination of debtNo discretion survives once default is establishedConcept of revivalFinancial distressSafeguarding the interests of homebuyersIssuance of directions to the Committee of Creditors

Judgment

[2026] 1 S.C.R. 850 : 2026 INSC 58

Elegna Co-op. Housing and Commercial Society Ltd.
v.
Edelweiss Asset Reconstruction Company Limited & Anr.
(Civil Appeal No. 10261 of 2025)
15 January 2026
[J.B. Pardiwala and R. Mahadevan,* JJ.]

Issue for Consideration
Issue arose whether the NCLAT was correct in admitting Corporate
Debtor into the Corporate Insolvency Resolution Process; and
whether the NCLAT was correct in rejecting the Intervention
application filed by the Society.

Headnotes†
Insolvency and Bankruptcy Code, 2016 – ss.5(8)(f), 7,
7(5)(a) – Corporate Insolvency Resolution Process (CIRP) –
Admission of the Corporate Debtor into CIRP – Locus standi
to intervene in proceedings u/s.7 – Appellant-Corporate
debtor availed financial assistance of Rs.70 crores from ECL-
Original Lender for the development of the residential-cum-
commercial project – Appellant failed to pay loan installments,
and thereafter the accounts were declared NPA – Original
Lender transferred all its rights, title, and interest in the said
loan to EARCL-Financial Creditor – Appellant failed in making
the payment despite entering into One Time Settlement
Agreement – Financial Creditor initiated CIRP u/s.7, in order
to recover the loan amount – NCLT dismissed the petition
holding that the facts did not warrant initiation of the CIRP as
IBC was being invoked as a recovery mechanism rather than
as a tool for insolvency resolution; and that the project was
viable and substantially complete and CIRP process would
adversely affect the interests of the homebuyers – NCLAT
set aside the order of NCLT and directed admission of the
application u/s.7 – ECHCS (Society)-association of homebuyers
moved intervention application before the NCLAT, which was
dismissed for want of locus – Correctness:

* Author
[2026] 1 S.C.R. 851

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

Held: Once the Adjudicating Authority is satisfied that a financial
debt exists and a default has occurred, it must admit the application
unless it is incomplete – Inquiry u/s.7(5)(a) is confined strictly to the
determination of debt and default, leaving no scope for equitable
or discretionary considerations – Corporate Debtor admittedly
possesses no adjudicated or realisable claim exceeding the amount
in default – Its reliance on business viability, unsold inventory,
project status, or anticipated receivables does not constitute “good
reasons” in law to defer or deny admission of CIRP – Existence
of a financial debt owed to EARCL is undisputed – Persistent
defaults stand admitted and are conclusively established on
record, including breach of the restructuring agreement and
failure to pay instalments within the stipulated cure period –
Restructuring arrangement failed due to non-payment by the
Corporate Debtor, thereby triggering an express event of default
under its terms – NCLAT correctly held that considerations such
as ongoing operations, partial project completion, or anticipated
receivables are extraneous to the statutory mandate u/s.7 – It
cannot be said that EARCL misused the Code as a recovery
tool – Allegations of mala fide invocation neither pleaded or
established – Circumstances, taken cumulatively, substantiated
EARCL’s request for initiation of CIRP – Thus, impugned judgment
admitting the Corporate Debtor into the CIRP does not suffer from
any legal infirmity – As regards the rejection of the intervention
application filed by the society, the appellant Society neither a
financial nor an operational creditor – It is a maintenance society
not constituted for insolvency representation – No documentary
proof of registration, collective authorisation, or general body
resolution produced – Membership is automatic and mandatory,
negating consensual representation – Intervention application filed
only at the appellate stage and not before the NCLT – Society
not a party to the financial transaction forming the substratum of
the s.7 application, hence, no statutory right of appeal inheres
in the appellant – Right to initiate or participate in insolvency
proceedings is statutory, not equitable – Society or Resident
Welfare Association, not being a creditor in its own right and not
recognised as an authorised representative of allottees under
the IBC, has no locus standi to intervene in proceedings arising
out of a s.7 petition – NCLAT justified in rejecting the Society’s
intervention application – No prejudice caused to homebuyers,
852 [2026] 1 S.C.R.

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whose interests are adequately safeguarded under the Code –
Upon commencement of CIRP, any aggrieved stakeholder may
avail remedies strictly in accordance with the Code. [Paras 12.3,
12.8-12.12, 12.18, 12.21, 12.22, 13.7, 13.8, 13.17, 13.22, 15]

Insolvency and Bankruptcy Code, 2016 – Cases of insolvency
against the project developers – Safeguarding the interests
of homebuyers – Issuance of directions to the Committee of
Creditors:
Held: While the commercial wisdom of the Committee of Creditors-
CoC is paramount and is not ordinarily amenable to judicial
review, the width of powers vested in the CoC carries with it a
corresponding duty of responsibility – Any extraordinary or non-
routine decision taken by the CoC must, thus, be supported by
cogent reasons duly recorded in writing – With a view to advancing
transparency, ensuring accountability, and safeguarding the
interests of homebuyers, issuance of directions – Information
Memorandum to mandatorily disclose comprehensive and complete
details of all allottees – Where the CoC, upon due consideration,
finds it not viable to approve handover of possession in terms
of the CIRP Regulations, it shall mandatorily record cogent and
specific reasons in writing for such decision – Any recommendation
for liquidation by the Committee of Creditors to be accompanied
by a reasoned justification recorded in writing evidencing proper
application of mind and due consideration of all viable alternatives,
in consonance with the objective of the Code – These directions
to operate prospectively and to be complied with forthwith.
[Para 15.1]

Case Law Cited
Innoventive Industries Ltd v. ICICI Bank [2017] 8 SCR 33 : (2018)
1 SCC 407; ES. Krishnamurthy v. Bharath Hi- Tech Builders Pvt.
Ltd [2021] 12 SCR 28 : (2022) 3 SCC 161; Swiss Ribbons (P)
Ltd. v. Union of India [2019] 3 SCR 535 : (2019) 4 SCC 17; Indus
Biotech Private Ltd. v. Kotak India Venture (Offshore) Fund and
Others [2021] 7 SCR 112 : (2021) 6 SCC 436; GLAS Trust Co.
LLC v. BYJU Raveendran, 2024 INSC 811 : [2024] 10 SCR 1802 :
(2025) 3 SCC 625 – relied on.
Vidarbha Industries Power Ltd v. Axis Bank Ltd [2022] 12 SCR
139 : (2022) 8 SCC 352 – distinguished.
[2026] 1 S.C.R. 853

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

Pioneer Urban Land and Infrastructure Ltd v. Union of India [2019]
10 SCR 381 : (2019) 8 SCC 416; Chitra Sharma v. Union of India
[2018] 12 SCR 1044 : (2018) 18 SCC 575; Mobilox Innovations
Pvt. Ltd. v. Kirusa Software Pvt. Ltd [2017] 10 SCR 1006 :
(2018) 1 SCC 353; State Bank of India v. Hubtown Bus Terminal
(Vadodara) Pvt. Ltd., R/LPA No. 1 of 2022 in R/Special Civil
Application No. 10985 of 2021 etc. cases dated 18.10.2022; M.
Suresh Kumar Reddy v. Canara Bank and Others [2023] 5 SCR
387 : 2023 SCC OnLine SC 608; Kotak Mahindra Bank Ltd. v. A.
Balakrishnan and Another [2022] 5 SCR 1072 : (2022) 9 SCC 186;
Tottempudi Salalith v. SBI [2023] 14 SCR 492 : (2024) 1 SCC 24;
Haldiram Incorporation (P) Ltd. v. Amrit Hatcheries (P) Ltd, 2023
SCC OnLine SC 1706; Karad Urban Cooperative Bank Limited v.
Swwapnil Bhingardevay and Others [2020] 13 SCR 465 : (2020) 9
SCC 729; Independent Sugar Corpn. Ltd. v. Girish Sriram Juneja
& Ors., 2025 INSC 124 : [2025] 1 SCR 1782 : (2025) 5 SCC 209;
Phoenix ARC Pvt. Ltd v. Spade Financial Services Ltd [2021]
15 SCR 1079 : (2021) 3 SCC 475; Bishambhar Prasad v. Arfat
Petrochemicals Pvt. Ltd. and Others [2023] 7 SCR 230 : 2023
SCC OnLine SC 458; Mansi Brar Fernandes v. Shubha Sharma
and Another, 2025 INSC 1110 : [2025] 10 SCR 169 – referred to.

List of Acts
SARFAESI Act, 2002; Real Estate (Regulation and Development)
Act, 2016; Companies Act, 2013; Consumer Protection Act, 2019;
Insolvency and Bankruptcy Code, 2016; Code of Civil Procedure,
1908; Security Interest (Enforcement) Rules, 2002; IBBI (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016;
NCLAT Rules, 2016; Constitution of India.

List of Keywords
Corporate Insolvency Resolution Process (CIRP); Admission of
the Corporate Debtor into CIRP; Initiation of CIRP; Locus standi
of society; One time settlement agreement; Recovery mechanism;
Residential project; Home buyers’ society; Interests of homebuyers;
Financial debt exists; Default; Determination of debt; No discretion
survives once default is established; Concept of revival; Financial
distress; Safeguarding the interests of homebuyers; Issuance of
directions to the Committee of Creditors.
854 [2026] 1 S.C.R.

Supreme Court Reports

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10261 of 2025
From the Judgment and Order dated 01.07.2025 of the National
Company Law Appellate Tribunal in CAAT No. 2261 of 2024
With
Civil Appeal No. 10012 of 2025

Appearances for Parties
Advs. for the Appellant(s):
Ms. Madhavi Diwan, Nikhil Goel, Sr. Advs., Ms. Purti Gupta, Arjun
Sheth, Rishabh Shah, Ms. Pooja Aggarwal, Ms. Henna George,
Ms. Sunidhi Sah.
Advs. for the Respondent(s):
P Nagesh, Nikhil Goel, Sr. Advs., Abhishek Agarwal, Atul Sharma,
Ms. Renuka Iyer, Aditya Vashith, Anmol Bansal, Ms. Henna George,
Ms. Sunidhi Sah.

Judgment / Order of the Supreme Court

Judgment

R. Mahadevan, J.

1. The present appeals are directed against the final judgment and order
dated 01.07.2025 passed by the National Company Law Appellate
Tribunal1, Principal Bench, New Delhi, in Company Appeal (AT)
(Insolvency) No. 2261 of 2024.
2. By the impugned judgment, the NCLAT set aside the order dated
06.11.2024 passed by the Adjudicating Authority, National Company
Law Tribunal2, Ahmedabad Bench, in CP (IB) No. 140 (AHM) / 2024,
and directed admission of the application filed under Section 7 of
the Insolvency and Bankruptcy Code, 20163, thereby initiating the

1 For short, “NCLAT”
2 For short, “NCLT”
3 For short, “IBC”
[2026] 1 S.C.R. 855

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

Corporate Insolvency Resolution Process4 against the appellant in
C.A. No. 10012 of 2025 – Takshashila Heights India Private Limited.
The NCLAT further rejected the intervention application filed by the
appellant in C.A. No. 10261 of 2025 – Elegna Co-operative Housing
and Commercial Society Ltd.5 on the ground that it lacked locus
standi to intervene in the aforesaid company appeal.
3. For the sake of convenience, the parties to the present appeals are
arrayed as under:

Name of the Before NCLT Before NCLAT Before this
Party Court
[CP (IB) No. [CA (AT) (Ins.)
104(AHM)/2024] No. 2261 of [CA No. 10261
2024] of 2025 / CA
No. 10012 of
2025]
Elegna Co- Not a party Intervenor Appellant / -
operative Housing
and Commercial
Society Ltd.
Takshashila Respondent Respondent Respondent
Heights India No. 2 /
Private Ltd. Appellant
(Corporate
Debtor)
Edelweiss Asset Applicant Appellant Respondent
Reconstruction No. 1 /
Company Ltd. Respondent
(Financial
Creditor)

Brief facts
4. The necessary facts leading to the filing of the present appeals are
as follows:
4.1. The appellant in C.A. No. 10012 of 2025 (Corporate Debtor)
availed financial assistance of Rs. 70 crores from ECL Finance
Ltd. (Original Lender), on 19.07.2018 under two term loan

4 For short, “CIRP”
5 For short, “Society”
856 [2026] 1 S.C.R.

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facilities, for the purpose of developing a residential -cum-
commercial project titled “Takshashila Elegna”. To secure
the said facilities, the Corporate Debtor and its promoters
executed loan agreements, promissory notes, and other security
documents on 25.07.2018 (for Term Loan – I of Rs. 40 crores)
and 26.09.2018 (for Term Loan – II of Rs.30 crores). An Indenture
of Mortgage was subsequently executed on 04.09.2020 in favour
of the Original Lender to secure repayment of the said loans.
There was delay in repayment of the loan instalments and the
Corporate Debtor made its last payment on 30.09.2021, after
which the loan accounts were classified as Non-Performing
Assets (NPA) on 30.12.2021.
4.2. On 09.05.2022, the Original Lender executed an Assignment
Agreement transferring all its rights, title, and interest in the said
loan to Edelweiss Asset Reconstruction Company Ltd.6 (Financial
Creditor). Following the same, the Financial Creditor issued a
recall and invocation of guarantee notice dated 31.05.2022,
demanding a sum of Rs. 53,03,18,487/- from the Corporate
Debtor and its personal guarantors against Term Loans I and
II. They also initiated recovery proceedings by filing of O.A. No.
367 of 2022 before the Debts Recovery Tribunal, Ahmedabad,
and issued a demand notice dated 21.07.2022 under Section
13(2) of the SARFAESI Act, 2002 for Rs. 57,24,96,064/- as on
30.06.2022.
4.3. Pursuant to commercial discussions, the Corporate Debtor and
the Financial Debtor entered into a Restructuring – cum – One
Time Settlement Agreement on 23.05.2023, under which the
Corporate Debtor agreed to discharge its outstanding liability
of Rs. 55 crores in a phased manner. The Corporate Debtor
made payment of Rs. 5.5 crores towards the first instalment
on 30.06.2023. The Corporate Debtor vide communication
dated 25.09.2023, requested the Financial Creditor to issue
a provisional No Objection Certificate to facilitate the sale of
unsold secured units in the project. However, the Financial
Creditor declined to issue NOC and subsequently revoked
the restructuring arrangement on 29.12.2023 citing default in
payment of instalments.

6 For short, “EARCL”
[2026] 1 S.C.R. 857

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

4.4. Thereafter, the EARCL – Financial Creditor filed a petition under
Section 7 of the IBC before the NCLT, seeking initiation of the
CIRP against the Corporate Debtor. During pendency of the
said proceedings, the Financial Creditor issued a sale notice
dated 10.04.2024 under Rule 8(6) read with Rule 9(1) of the
Security Interest (Enforcement) Rules, 20027 and the notice
was published in newspapers on 18.05.2024.
4.5. By a detailed and reasoned order dated 06.11.2024, the NCLT
dismissed the Section 7 petition, holding that the facts of the
case did not warrant initiation of the CIRP as the IBC was being
invoked as a recovery mechanism rather than as a tool for
insolvency resolution. The NCLT further noted that the project
was viable and substantially complete, and that insolvency
proceedings would adversely affect the interests of homebuyers
and other stakeholders.
4.6. Challenging the order of the NCLT, the Financial Creditor
preferred Company Appeal (AT)(Ins.) No. 2261 of 2024 before
the NCLAT. The Society filed an intervention application under
Rule 11 of the NCLAT Rules, 2016, on the ground that the
outcome of the appeal would directly affect the proprietary and
contractual rights of its members.
4.7. The NCLAT, by its judgment dated 01.07.2025, allowed the
appeal filed by the Financial Creditor, set aside the order of
the NCLT, and directed admission of the Section 7 petition,
thereby initiating CIRP against the Corporate Debtor. The
NCLAT, however, rejected the intervention application, holding
that the Society lacked locus standi as it was not a party to the
financial transaction forming the subject matter of the appeal.
4.8. Aggrieved thereby, the Society as well as the Corporate Debtor
have preferred the present Civil Appeals independently.

Contentions of the Parties
5. The learned senior counsel for the appellant in C.A. No. 10261 of
2025 – Society at the outset, submitted that the impugned judgment

7 For short, “Securitisation Rules”
858 [2026] 1 S.C.R.

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suffers from procedural impropriety and has been passed in undue
haste, without affording a fair and reasonable opportunity of hearing
to the appellant.
5.1. It was submitted by the learned senior counsel that
the appellant Society is a registered co-operative body
representing more than 189 confirmed unit holders of the
real estate project “Takshashila Elegna”, developed by the
Corporate Debtor. The rights and interests of its members are
directly and substantially affected by the outcome of the appeal
arising under Section 7 of the IBC. The Society’s intervention
application was based on its status as a collective body of
homebuyers, who are recognised as “financial creditors” under
Explanation (i) to Section 5(8)(f) of the IBC, as affirmed by
this Court in Pioneer Urban Land and Infrastructure Ltd v.
Union of India8 which held that allottees in a real estate
project are to be treated as financial creditors and are entitled
to participate in the CIRP.
5.2. The learned senior counsel further submitted that the
appellant is neither a stranger nor an intermeddler, but a
directly interested stakeholder whose members’ proprietary
and contractual rights stand imperilled by the initiation of the
CIRP of the corporate debtor. However, the NCLAT erred in
holding that the appellant had no locus standi to intervene on
the ground that it was not a party to the underlying financial
transaction.
5.3. It was further contended by the learned senior counsel that
the NCLAT misdirected itself in treating the appellant as an
“unrelated third party” merely because its members belong to
a completed tower of the same project. The creation of such
an artificial distinction between unit holders of completed and
uncompleted towers within a single real estate development
is arbitrary, lacks intelligible differentia, and bears no rational
nexus to the object sought to be achieved. Such sub-
classification within a homogeneous class of allotees offends
Article 14 of the Constitution of India.

8 (2019) 8 SCC 416
[2026] 1 S.C.R. 859

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

5.4. The learned senior counsel pointed out that upon
commencement of CIRP, the contractual right of allottees to
seek specific performance of their agreements to sell stands
extinguished by virtue of Regulation 4E of IBBI (Insolvency
Resolution Process for Corporate Persons) Regulations,
20169, which mandates that any registration or possession
of units shall be subject to the approval of the Committee
of Creditors (CoC). The NCLAT failed to take this statutory
consequence into account.
5.5. It was emphasised by the learned senior counsel that
initiation of CIRP suspends the operation of the Real Estate
(Regulation and Development) Act, 2016 (RERA), thereby
depriving homebuyers of their statutory remedies under RERA.
Simultaneously, their participation before the CoC remains
uncertain and disproportionately weak owing to their limited
voting share as unsecured financial creditors.
5.6. Reliance was placed on Chitra Sharma v. Union of India10,
wherein this Court underscored the need to afford special
protection to the interests of homebuyers in real estate
insolvencies. Denying the appellant a hearing in such
circumstances constitutes a violation of the principle of audi
alteram partem and results in a grave miscarriage of justice.
5.7. It was further urged by the learned senior counsel that the
NCLAT failed to exercise its inherent powers under Rule 11
of the NCLAT Rules, 2016, which empower it to pass such
orders as may be necessary to meet the ends of justice. The
rejection of the intervention application was mechanical and
devoid of due consideration of the equities involved, thereby
defeating the participatory and transparent process envisaged
under the IBC.
5.8. The learned senior counsel also pointed out that the
intervention application was neither properly registered
nor reflected in the cause title of the impugned judgment,
evidencing procedural irregularity and lack of due process.

9 For short, “CIRP Regulations”
10 (2018) 18 SCC 575
860 [2026] 1 S.C.R.

Supreme Court Reports

The omission to adjudicate upon the same in a reasoned
manner renders the impugned judgment unsustainable in law.
5.9. It was next submitted that the initiation of CIRP in real estate
cases often extends far beyond statutory timelines, leaving
homebuyers in prolonged uncertainty. During this period,
allottees continue to pay EMIs on their home loans without
possession of their units, causing serious financial hardship.
5.10. The learned senior counsel contended that exclusion of the
appellant from the appellate proceedings causes procedural
unfairness and violates Article 14 by denying similarly placed
financial creditors the opportunity to be heard. The question
of intervention is not merely procedural but concerns the
substantive rights of the allottees, who risk losing their
proprietary interest and right to possession in the event of
liquidation under Section 53 of the IBC.
5.11. It was further submitted by the learned senior counsel that
the participation of the appellant would not have prejudiced
the appellate proceedings. On the contrary, it would have
advanced the cause of justice by ensuring that all affected
stakeholders are heard before any order impacting their
rights is passed. The rejection of the appellant’s intervention
application, therefore, results in manifest injustice and warrants
interference by this Court under Section 62 of the IBC.
5.12. The learned senior counsel submitted that the conduct of
the financial creditor in simultaneously pursing CIRP, while
also attempting to sell units and recover amounts under the
Securitisation Rules, is clearly mala fide and squarely attracts
Section 65 of the IBC. In this regard, reliance was placed on the
judgment of this Court in Innoventive Industries Ltd v. ICICI
Bank11, wherein it was held that once an order of admission
is passed, the CIRP commences and the moratorium comes
into effect, thereby imposing a freeze on, inter alia, the sale
or alienation of assets.
5.13. It was further submitted by the learned senior counsel that
in Swiss Ribbons (P) Ltd. v. Union of India12, this Court

11 (2018) 1 SCC 407
12 (2019) 4 SCC 17
[2026] 1 S.C.R. 861

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

underlined the defining qualities of a financial creditor, who
is required to have the long-term interests of the Corporate
Debtor at heart and not be merely interested in quick recovery
regardless of the future of the Corporate Debtor. Whereas, in
the present case, the Respondent – Financial Creditor, being
in the business of acquiring debts and instituting Section 7
proceedings on the strength of such debts, is purely in the
business of recovery, at the cost of the real estate project as
a whole. They have shown no regard for the interest of the
other financial creditors, who are deeply invested in the project,
having sunk their hard-earned savings into the purchase of
flats in the real estate project. According to the learned senior
counsel, the project is 90% complete. However, the Financial
Creditor is intent upon taking the Corporate Debtor into CIRP,
thereby creating a situation of instability and uncertainty, apart
from bringing the project to a standstill and depleting the value
of the units, both sold and unsold. Such conduct, far from
protecting the interests of the corporate debtor imperils them.
5.14. In light of the foregoing, it was submitted by the learned senior
counsel that the impugned judgment rejecting the appellant’s
intervention application is arbitrary, procedurally irregular, and
violative of Articles 14 and 21 of the Constitution, as well as the
principles of natural justice and the same therefore, deserves
to be set aside, and the appellant ought to be permitted to
intervene in the proceedings initiated against the Corporate
Debtor to safeguard the legitimate interests of homebuyers,
who are the end users of the project “Takshashila Elegna”.
6. Continuing further, the learned senior counsel for the appellant in
C.A. No. 10012 of 2025 – Takshashila Heights India Private Limited
submitted that the NCLAT has mechanically applied Section 7(5)(a) of
the IBC without considering the bona fide commercial viability of the
project, the recovery-oriented conduct of the respondent – Financial
Creditor, and the grave prejudice caused to hundreds of homebuyers
whose interests the IBC is designed to safeguard.
6.1. According to the learned senior counsel, the appellant is a real
estate developer engaged in the construction of a residential –
cum – commercial project titled “Takshashila Elegna” situated at
Ahmedabad, Gujarat, comprising four towers and 279 units (259
862 [2026] 1 S.C.R.

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residential + 20 commercial). The project is duly registered under
Gujarat RERA and has achieved substantial completion, with
Building Use Certificates issued by the Ahmedabad Municipal
Corporation for all towers. Out of 279 units, 189 have been
sold, 80 allottees have taken possession, and an amount of Rs.
103 crores has been realised from homebuyers. The remaining
unsold inventory constitutes a ready and monetizable asset pool
sufficient to discharge all outstanding liabilities. To finance the
project, the corporate debtor availed two term loans aggregating
to Rs. 70 crores from ECL Finance Limited on 19.07.2018,
secured by mortgage of project assets and personal guarantees.
Due to Covid-19 disruptions and delays in statutory approvals,
repayment timelines were adversely affected, and the accounts
were classified as NPA on 30.12.2021. Subsequently, on
31.12.2021 (as amended on 09.05.2022), ECL Finance assigned
the debt to EARCL, acting as Trustee of EARC Trust SC 444.
EARCL issued a recall notice dated 31.05.2022 demanding Rs.
53.03 crores, followed by a SARFAESI notice dated 21.07.2022
for Rs. 57.24 crores and filed OA No. 367 of 2022 before the
DRT, Ahmedabad – clearly reflecting a recovery driven approach.
6.2. The learned senior counsel further submitted that after
negotiations, the parties entered into a Restructuring – cum –
One Time Settlement (OTS) on 23.05.2023, fixing the liability at
Rs. 55 crores (Rs. 39 crores by the corporate debtor and Rs. 16
crores by Raghav Conpro LLP), payable in eight instalments.
The OTS obligated EARCL to issue provisional NOCs for sale
of secured units to enable repayment. The corporate debtor
paid Rs. 5.5 crores towards the first instalment and Rs. 0.86
crores towards the second. However, EARCL refused to issue
NOCs, thereby obstructing monetisation of unsold units and
directly preventing further payments. Despite being in breach
of its own obligation, EARCL unilaterally revoked the OTS on
29.12.2023 alleging default. This default, being the result of
EARCL’s own non-performance, is a manufactured and self-
induced default. Thereafter, EARCL filed a Section 7 petition
on 23.02.2024 claiming Rs. 93.54 crores (as on 31.01.2024) –
an inflated figure nearly Rs. 40 crores higher than the OTS
amount, primarily due to arbitrary penal interest. Simultaneously,
EARCL pursued the proceedings under the SARFAESI Act
[2026] 1 S.C.R. 863

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

through a sale notice dated 10.04.2024 and a public notice
dated 18.05.2024, amounting to forum shopping and parallel
recovery in contravention of the IBC framework.
6.3. The learned senior counsel submitted that the NCLT after
detailed consideration, dismissed the Section 7 petition holding
that (a)the project was substantially complete; (b)initiation of
CIRP would gravely prejudice homebuyers; and (c)EARCL’s
actions amounted to abuse of the IBC for recovery. The NCLAT,
however, reversed the order solely on the ground that “proof of
debt and default” was sufficient for admission and that Vidarbha
Industries Power Ltd v. Axis Bank Ltd13 was inapplicable.
Such a conclusion ignores the discretionary nature of Section
7(5)(a) and is contrary to settled law.
6.4. The learned senior counsel submitted that the sequence of
actions – recall notice, SARFAESI proceedings, DRT filing, OTS,
revocation, and Section 7 filing – demonstrates that EARCL
has invoked every recovery mechanism, treating the IBC as
an additional coercive tool. In Swiss Ribbons, this Court held
that the IBC is a beneficial legislation aimed at revival of the
corporate debtor and not a mere debt recovery instrument. In
Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.14
adopting the UNCITRAL Legislative Guide, it was recognised
that insolvency proceedings may be denied where their purpose
is improper or coercive. Recently, in GLAS Trust Co. LLC v.
BYJU Raveendran15, this Court reaffirmed that IBC must not be
misused by individual creditors as a tool for coercion or recovery,
especially where the corporate debtor is viable and operation.
EARCL, being an Asset Reconstruction Company, inherently
seeks debt recovery. While such a pursuit is permissible under
SARFAESI Act, it cannot justify recourse to IBC when the project
is commercially viable, substantially complete, and capable of
generating sufficient cash flow.
6.5. It was also submitted by the learned senior counsel that
EARCL’s own records disclose inconsistent and inflated demand

13 (2022) 8 SCC 352
14 (2018) 1 SCC 353
15 2024 INSC 811 : (2025) 3 SCC 625
864 [2026] 1 S.C.R.

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figures. The demand escalation of nearly Rs. 40 crores within
18 months, driven by penal interest and arbitrary charges, is
commercially unreasonable and evidences mala fide intent to
create a façade of default.
6.6. It was also pointed out that this Court in Vidarbha Industries
held that the Adjudicating Authority “may” admit a petition under
Section 7, thereby conferring discretion to assess the expedience
and necessity of CIRP based on the corporate debtor’s financial
position and overall circumstances. The NCLT rightly exercised
such discretion, noting that the project was substantially
complete, receivables were assured, and CIRP would harm
homebuyers. The NCLAT erred in reducing the process to a
mechanical admission test, disregarding Vidarbha Industries,
which remains binding and unaltered in law. Discretion under
Section 7(5)(a) serves as a vital safeguard against abuse of
process, ensuring that viable enterprises are not forced into
insolvency due to tactical defaults or recovery motives.
6.7. It was submitted by the learned senior counsel that the
appellant’s project is substantially complete with 189 units sold
and 80 possessions delivered. Admission of CIRP would freeze
conveyances and registrations, suspend ongoing possession
and maintenance, deprive homebuyers of their contractual
and statutory rights under RERA, and destroy the viability of a
function project. Such outcomes defeat the IBC’s twin objectives
of value maximisation and continuation of viable enterprises.
As recognised in Chitra Sharma, the rights of homebuyers
warrant special protection in real estate insolvencies. The
Gujarat High Court in State Bank of India v. Hubtown Bus
Terminal (Vadodara) Pvt. Ltd.16 similarly recognized that
settlement through sale of inventory and escrow appropriation
is a legitimate alternative to CIRP, aligning with the IBC’s
revival- oriented scheme.
6.8. It was submitted by the learned senior counsel that the corporate
debtor has already proposed a renewed repayment plan and
sought a meeting with EARCL vide email dated 13.08.2025,
indicating continued willingness to repay. If EARCL issues the

16 R/LPA No. 1 of 2022 in R/Special Civil Application No. 10985 of 2021 etc cases dated 18.10.2022
[2026] 1 S.C.R. 865

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

required NOC and facilities sales of unsold units, the entire
outstanding liability can be liquidated without recourse to CIRP.
6.9. Therefore, it was submitted by the learned senior counsel that
the Section 7 petition filed by EARCL constitutes a misuse of the
IBC for coercive recovery. The alleged default is manufactured,
the project is viable and substantially complete, and there
exists sufficient receivable to discharge all dues. The NCLT
correctly exercised discretion under Section 7(5)(a) in dismissing
the petition. The NCLAT, in reversing it without considering
expedience, viability, or stakeholder impact, committed an error
apparent on the face of record. Therefore, the learned senior
counsel prayed that this court may be pleased to allow the
appeal, set aside the impugned judgment of the NCLAT dated
01.07.2025, and restore the reasoned order of the NCLT dated
06.11.2024 dismissing the Section 7 petition.
7. The learned senior counsel appearing on behalf of Respondent
No.1, EARCL – Financial Creditor made the following submissions:

Lack of locus standi of the appellant Society
(i) The appellant is merely a maintenance society constituted for
upkeep and administration of the project premises and not a
representative body formed by allottees for protection of their
collective interests. Consequently, it cannot be regarded either
as a “financial creditor” under Section 5(7) or as an “operational
creditor” under Section 5(20) of the IBC. It therefore lacks locus
standi to intervene in or object to proceedings under Section
7 of the Code.
(ii) The appellant is not a party to any loan agreements, debenture
subscription agreements, or restructuring arrangements
executed between Respondent No. 1 and the Corporate Debtor.
Any grievance on behalf of homebuyers could only have been
raised through a duly recognized association or by a sufficient
number of allottees jointly, and before the Adjudicating Authority
(NCLT) not belatedly before the NCLAT in appeal.
(iii) The appeal itself suffers from procedural infirmities: the Appellant
failed to annex its registration certificate; the supporting affidavit
is sworn by one Mr. Vishal Parmar, who is neither an allottee
866 [2026] 1 S.C.R.

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nor a unit holder; and no resolution or collective authorization
from the allottees empowering him to act on their behalf has
been produced.

Necessity and urgency of admitting the Corporate Debtor into CIRP
(i) The Corporate Debtor’s liability is not confined to Respondent No.
1 alone. Multiple creditors, including IDBI Trusteeship Services
Ltd., have independently initiated proceedings under Section
7 (Company Petition (IB) No, 190/AHM / 2025), establishing
persistent defaults across creditors. This demonstrates systemic
financial stress and underscores the necessity of admitting
CIRP to preserve value, prevent asset dissipation, and ensure
equitable treatment of all stakeholders.
(ii) In E.S. Krishnamurthy v. Bharath Hi- Tech Builders Pvt.
Ltd17, this Court reiterated that the enquiry under Section 7
of the IBC is confined to the existence of a financial debt and
the occurrence of default. Once these twin conditions are
established, admission of the petition is mandatory.
(iii) Reliance on Vidarbha Industries is wholly misplaced. In M.
Suresh Kumar Reddy v. Canara Bank and others18, this
Court clarified that Vidarbha Industries turned on its peculiar
facts and does not dilute or override the binding principles laid
down in Innoventive Industries and E.S. Krishnamurthy.
Any interpretation of Vidarbha Industries as conferring broad
discretion upon the Adjudicating Authority to refuse admission
despite an undisputed debt and default would defeat the scheme
and objective of the IBC.
(iv) The IBC framework incorporates comprehensive safeguards
to protect homebuyers’ interests. Homebuyers are statutorily
recognized as financial creditors and are represented in
the Committee of Creditors (CoC) through an Authorised
Representative under Section 21(6A) read with Regulation 16A
of the CIRP Regulations.
(v) Regulation 4E of the CIRP Regulations pertains to post-
admission procedures and cannot be invoked to resist initiation

17 (2022) 3 SCC 161
18 2023 SCC OnLine SC 608
[2026] 1 S.C.R. 867

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

of CIRP. It casts mandatory obligations on the Resolution
Professional, upon CoC approval, to deliver possession and
facilitate registration of units. This provision strengthens, rather
than restricts, the protection available to homebuyers.
(vi) Even in liquidation, allottees in possession remain protected,
as such units are expressly excluded from the liquidation
estate under Regulation 46A of the IBBI (Liquidation Process)
Regulations, 2016. Further, Pioneer Urban Land affirms the
harmonious coexistence of homebuyers’ rights under RERA
with the IBC framework.
(vii) Admission of CIRP does not extinguish the contractual or
proprietary rights of allottees. On the contrary, it facilitates project
completion, enables infusion of new capital, and maximises
value for all stakeholders. Several real estate insolvency cases
demonstrate that CIRP has expedited delivery of possession and
improved project viability as compared to fragmented individual
enforcement or recovery proceedings.
(viii) The corporate debtor defaulted on the very second instalment,
paying only Rs.86 lakhs against the agreed Rs. 3 crores. Despite
repeated reminders and a contractual cure period, it failed to
rectify the default. Extensive email correspondence evidences
repeated indulgence by the financial creditor and sustained
non-compliance by the corporate debtor. Consequently, the
Respondent lawfully revoked the restructuring arrangement
and recalled the outstanding liability on 29.12.2023.
(ix) Initiation or continuation of recovery proceedings prior to
admission of CIRP is legally permissible and does not bar
initiation of insolvency proceedings under section 7. The NCLAT
has consistently held that pendency of recovery proceedings
before the DRT or enforcement under the SARFAESI Act does
not preclude a financial creditor from invoking the IBC.
With these submissions, the learned senior counsel prayed for
dismissal of the appeals by affirming the judgment of the NCLAT.

Analysis
8. We have considered the submissions made by the learned counsel
appearing for the parties and perusal of the materials available on
record carefully and meticulously.
868 [2026] 1 S.C.R.

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9. By order dated 06.08.2025, this Court stayed the operation of
the impugned judgment and order passed by the NCLAT till the
pronouncement of the judgment, and further directed all parties
to maintain status quo with regard to the nature, character and
possession of the property.
10. This Court has, time and again, been called upon to protect the
rights of homebuyers navigating the turbulent waters of India’s real
estate sector. Conscious of its constitutional and statutory duty, this
Court has made sustained efforts, within the four corners of the law,
to safeguard the legitimate interests of homebuyers.
10.1. In theory, the Insolvency and Bankruptcy Code, 2016 presents
an effective solution to their woes: a distressed project is
rescued through the corporate insolvency resolution process,
construction is completed, and the allotted units are ultimately
delivered. On paper, the framework appears straightforward. In
practice, however, homebuyers are often gripped with anxiety
when a project enters CIRP. Caught between the developer on
one hand and institutional lenders on the other, their interests
are particularly vulnerable.
10.2. While homebuyers seek completion of the project they have
invested in, lenders, who ordinarily command a dominant
position in the Committee of Creditors, may prefer to accept
a haircut and press for liquidation, rather than undertake
the complexities and commercial risks involved in reviving a
struggling real estate project. It is at such junctures that this
Court must reiterate, and indeed remind, that the fundamental
object of the IBC is resolution and revival, and not mere
recovery.
10.3. If creditors elect to invoke the provisions of the Code, they
must do so with a genuine willingness to pursue revival of the
corporate debtor. Should revival not be their objective, the
Code cannot be converted into a tool for expedient recovery;
alternative statutory remedies, including under SARFAESI or
other applicable laws, remain available in accordance with law.
10.4. The interests of homebuyers are undoubtedly of paramount
importance. However, such interests must be protected strictly
[2026] 1 S.C.R. 869

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

within the legal framework. The resolution mechanism under
the IBC contains adequate safeguards for homebuyers, which
have been repeatedly strengthened by judicial interpretation.
The appropriate course lies in constructive engagement with the
Committee of Creditors, with a view to completing the project
and advancing the collective good, rather than fragmenting
the process through individual self-interest.
10.5. In light of the above, we proceed to examine the issues involved
in the present case, mindful of the delicate task of balancing
genuine yet competing interests.
11. In these appeals arising out of a common judgment, the two questions
that arise for consideration, are as follows:
1) Whether the NCLAT was correct in admitting Corporate Debtor
into the Corporate Insolvency Resolution Process?
2) Whether the NCLAT was correct in rejecting the Intervention
application filed by the Society.
12. Question No. 1 – Admission of the Corporate Debtor into CIRP
12.1. The Corporate Debtor contends that the initiation of CIRP
by the respondent – EARCL lacked bona fides and was
intended to operate as a recovery mechanism rather than a
resolution process. It is urged that the Corporate Debtor was
a going concern; that the real estate project was substantially
completed; and that adequate receivables from unsold
inventory were available to service the debt. The default,
according to the Corporate Debtor, was not wilful but occurred
due to EARCL’s refusal to issue provisional No Objection
Certificate, which allegedly frustrated further sale of remaining
units. Such conduct, it is contended, disentitles EARCL from
invoking Section 7 of the Code.
12.2. Per contra, EARCL submits that admission under Section 7
is governed exclusively by the existence of a financial debt
and the occurrence of default. Once these twin conditions
are satisfied, admission is mandatory. Considerations such
as project viability, stage of completion, alleged conduct of
the creditor, or perceived prejudice to homebuyers are wholly
irrelevant at the admission stage.
870 [2026] 1 S.C.R.

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12.3. The legal position is now well settled. In Innoventive Industries,
this Court held that once the Adjudicating Authority is satisfied
that a financial debt exists and a default has occurred, it must
admit the application unless it is incomplete. The inquiry under
Section 7(5)(a) is confined strictly to the determination of debt
and default, leaving no scope for equitable or discretionary
considerations.
12.4. This principle was reiterated in E.S. Krishnamurthy, wherein
this Court clarified that no discretion survives once default is
established. Similarly, in Swiss Ribbons, this Court reaffirmed
that the trigger for CIRP is default, and the object of the Code
is to ensure timely resolution to preserve enterprise value.
12.5. The reliance placed by the Corporate Debtor on Vidarbha
Industries is wholly misconceived. That decision has
consistently been recognised as a narrow exception confined to
its peculiar facts, namely the existence of an adjudicated and
realisable claim in favour of the corporate debtor exceeding
the debt owed.
12.6. This position now stands authoritatively clarified in M. Suresh
Kumar Reddy, wherein this Court held that Vidarbha
Industries does not dilute the binding ratio of Innoventive
Industries and E.S. Krishnamurthy. Admission under
Section 7 thus remains mandatory once debt and default
are established, with Vidarbha Industries operating only in
exceptional circumstances.
12.7. In any event, the scope of the Adjudicating Authority’s powers
stands elaborately discussed by a three-Judge Bench of this
Court in Indus Biotech Private Ltd. v. Kotak India Venture
(Offshore) Fund and others19. While recognising that the
NCLT is not expected to act mechanically and is empowered
to examine the material on record to satisfy itself that a default
has in fact occurred, this Court unequivocally held that once
the ingredients of Section 7, most importantly, default, are
satisfied, admission must follow. The relevant passages from
Indus Biotech are extracted below for ready reference:

19 (2021) 6 SCC 436
[2026] 1 S.C.R. 871

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

“14. In order to arrive at a conclusion on the
correctness or otherwise of the impugned order
[Indus Biotech (P) Ltd. v. Kotak India Venture Fund
(1), 2020 SCC OnLine NCLT 1430], at the outset
it is necessary for us to take note of the scope of
the proceedings under Section 7 of the IB Code to
which detailed reference is made with reference to
the definitions in Sections 3(6), 3(8), 3(11), 3(12) and
5(7) of the Code. It provides for the “financial creditor”
to file an application for initiating corporate insolvency
resolution process against a “corporate debtor” before
the adjudicating authority when “default” has occurred.
The provision, therefore, contemplates that in
order to trigger an application there should be in
existence four factors: (i) there should be a “debt”
(ii) “default” should have occurred (iii) debt should
be due to “financial creditor” and (iv) such default
which has occurred should be by a “corporate
debtor”. On such application being filed with the
compliance required under sub-sections (1) to
(3) of Section 7 of IB Code, a duty is cast on the
adjudicating authority to ascertain the existence
of a default if shown from the records or on the
basis of other evidence furnished by the financial
creditor, as contemplated under sub-section (4)
to Section 7 of IB Code.
15. This Court had the occasion to consider
exhaustively the scheme and working of the IB
Code in Innoventive Industries Ltd. v. ICICI Bank
[Innoventive Industries Ltd. v. ICICI Bank, (2018) 1
SCC 407 : (2018) 1 SCC (Civ) 356]. The proceeding
under Section 7 of the IB Code and the scope thereof
is articulated in paras 27 to 30 which read hereunder:
(SCC pp. 437-39)
“27. The scheme of the Code is to ensure
that when a default takes place, in the
sense that a debt becomes due and is
not paid, the insolvency resolution process
begins. Default is defined in Section 3(12)
872 [2026] 1 S.C.R.

Supreme Court Reports

in very wide terms as meaning non-
payment of a debt once it becomes due and
payable, which includes non-payment of
even part thereof or an instalment amount.
For the meaning of “debt”, we have to go
to Section 3(11), which in turn tells us that
a debt means a liability of obligation in
respect of a “claim” and for the meaning
of “claim”, we have to go back to Section
3(6) which defines “claim” to mean a right
to payment even if it is disputed. The Code
gets triggered the moment default is of
rupees one lakh or more (Section 4). The
corporate insolvency resolution process
may be triggered by the corporate debtor
itself or a financial creditor or operational
creditor. A distinction is made by the Code
between debts owed to financial creditors
and operational creditors. A financial
creditor has been defined under Section
5(7) as a person to whom a financial debt
is owed and a financial debt is defined
in Section 5(8) to mean a debt which is
disbursed against consideration for the
time value of money. As opposed to this,
an operational creditor means a person
to whom an operational debt is owed and
an operational debt under Section 5(21)
means a claim in respect of provision of
goods or services.
28. When it comes to a financial creditor
triggering the process, Section 7 becomes
relevant. Under the Explanation to Section
7(1), a default is in respect of a financial
debt owed to any financial creditor of the
corporate debtor—it need not be a debt
owed to the applicant financial creditor.
Under Section 7(2), an application is to
be made under sub-section (1) in such
[2026] 1 S.C.R. 873

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

form and manner as is prescribed, which
takes us to the Insolvency and Bankruptcy
(Application to adjudicating authority)
Rules, 2016. Under Rule 4, the application
is made by a financial creditor in Form 1
accompanied by documents and records
required therein. Form 1 is a detailed form
in 5 parts, which requires particulars of
the applicant in Part I, particulars of the
corporate debtor in Part II, particulars of the
proposed interim resolution professional
in Part III, particulars of the financial debt
in Part IV and documents, records and
evidence of default in Part V. Under Rule
4(3), the applicant is to dispatch a copy of
the application filed with the adjudicating
authority by registered post or speed post to
the registered office of the corporate debtor.
The speed, within which the adjudicating
authority is to ascertain the existence of a
default from the records of the information
utility or on the basis of evidence furnished
by the financial creditor, is important. This
it must do within 14 days of the receipt of
the application. It is at the stage of Section
7(5), where the adjudicating authority is to
be satisfied that a default has occurred, that
the corporate debtor is entitled to point out
that a default has not occurred in the sense
that the “debt”, which may also include a
disputed claim, is not due. A debt may not
be due if it is not payable in law or in fact.
The moment the adjudicating authority is
satisfied that a default has occurred, the
application must be admitted unless it
is incomplete, in which case it may give
notice to the applicant to rectify the defect
within 7 days of receipt of a notice from the
adjudicating authority. Under sub-section
874 [2026] 1 S.C.R.

Supreme Court Reports

(7), the adjudicating authority shall then
communicate the order passed to the
financial creditor and corporate debtor
within 7 days of admission or rejection
of such application, as the case may be.
29. The scheme of Section 7 stands in
contrast with the scheme under Section
8 where an operational creditor is, on the
occurrence of a default, to first deliver a
demand notice of the unpaid debt to the
operational debtor in the manner provided
in Section 8(1) of the Code. Under Section
8(2), the corporate debtor can, within a
period of 10 days of receipt of the demand
notice or copy of the invoice mentioned
in sub-section (1), bring to the notice of
the operational creditor the existence of
a dispute or the record of the pendency
of a suit or arbitration proceedings, which
is pre-existing i.e. before such notice or
invoice was received by the corporate
debtor. The moment there is existence of
such a dispute, the operational creditor
gets out of the clutches of the Code.
30. On the other hand, as we have seen,
in the case of a corporate debtor who
commits a default of a financial debt, the
adjudicating authority has merely to see
the records of the information utility or
other evidence produced by the financial
creditor to satisfy itself that a default has
occurred. It is of no matter that the debt
is disputed so long as the debt is “due”
i.e. payable unless interdicted by some law
or has not yet become due in the sense that
it is payable at some future date. It is only
when this is proved to the satisfaction
of the adjudicating authority that the
[2026] 1 S.C.R. 875

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

adjudicating authority may reject an
application and not otherwise.”
(emphasis supplied)

16. Dr Singhvi, learned Senior Counsel while
seeking to repel the contention put forth on behalf
of Indus Biotech Pvt. Ltd. seeks to emphasise that
a proceeding under Section 7 of IB Code is to be
considered in a stringent manner. Referring to the
Preamble to the IB Code, it is contended that the
same has evolved after all the earlier processes like
civil suit, winding-up petition, Sarfaesi proceeding and
SICA have failed to secure the desired result. The
provision under the IB Code is with the intention of
making a debtor to seek the creditor. In that regard, Dr
Singhvi has referred to the decisions in Swiss Ribbons
(P) Ltd. v. Union of India [Swiss Ribbons (P) Ltd. v.
Union of India, (2019) 4 SCC 17] and Booz Allen &
Hamilton Inc. v. SBI Home Finance Ltd. [Booz Allen
& Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5
SCC 532 : (2011) 2 SCC (Civ) 781] to contend that the
proceeding under Section 7 of IB Code is an action
in rem. As such insolvency and winding-up matters
are non-arbitrable. In that background, the nature of
transaction under the SS and SA was referred. It is
in that regard contended that the agreement provides
for the manner of redemption as also the redemption
value. The date of redemption is fixed as 31-12-2018.
The OCRPS when redeemed is payable within 15
days from the date of redemption. In such situation,
there is no other issue which requires resolution by
arbitration. Further, it is contended that Clauses 5.1
and 5.2 in Schedule J to the agreement provided
that the redemption value shall constitute a debt
outstanding by the Company to the holder. Hence
the amount being debt on the redemption date, if not
paid within 15 days of redemption constituted default.
In that background, when the petition under Section
7 of IB Code was filed the adjudicating authority
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ought to have looked into that aspect alone and the
consideration of an application filed under Section 8
of the 1996 Act is without jurisdiction is the contention.
17. The procedure contemplated will indicate that
before the adjudicating authority is satisfied as to
whether the default has occurred or not, in addition
to the material placed by the financial creditor, the
corporate debtor is entitled to point out that the
default has not occurred and that the debt is not
due, consequently to satisfy the adjudicating
authority that there is no default. In such exercise
undertaken by the adjudicating authority if it is found
that there is default, the process as contemplated
under sub-section (5) of Section 7 of IB Code is to
be followed as provided under sub-section (5)(a); or
if there is no default the adjudicating authority shall
reject the application as provided under sub-section
(5)(b) to Section 7 of IB Code. In that circumstance if
the finding of default is recorded and the adjudicating
authority proceeds to admit the application the
corporate insolvency resolution process commences
as provided under sub-section (6) and is required
to be processed further. In such event, it becomes
a proceeding in rem on the date of admission and
from that point onwards the matter would not be
arbitrable. The only course to be followed thereafter
is the resolution process under IB Code. Therefore,
the trigger point is not the filing of the application
under Section 7 of IB Code but admission of the
same on determining default.
18. In that circumstance, though Dr Singhvi has
referred to the evolution of IB Code after all earlier
legal process had failed to give the rightful place to
the creditor; which is sought to be achieved by the
IB Code, it cannot be said that by the procedure
prescribed under the IB Code it means that
the claim of the creditor if made before NCLT,
more particularly under Section 7 of IB Code is
[2026] 1 S.C.R. 877

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

sacrosanct and the corporate debtor is denuded
of putting forth its version or the contention to
show to the adjudicating authority that the default
has not occurred and explain the circumstance
for contending so. In fact, in the very decision relied
on by both the parties in Innoventive Industries Ltd.
[Innoventive Industries Ltd. v. ICICI Bank, (2018)
1 SCC 407 : (2018) 1 SCC (Civ) 356] , this Court
while considering the scope of the various provisions
under the Act and while referring to the procedure
contemplated in a petition under Section 7 of the
IB Code, which is also extracted supra reads thus :
(SCC p. 438, para 28)
“28. … It is at the stage of Section 7(5),
where the adjudicating authority is to
be satisfied that a default has occurred,
that the corporate debtor is entitled to
point out that a default has not occurred
in the sense that the “debt”, which may
also include a disputed claim, is not
due. A debt may not be due if it is not
payable in law or in fact.”
19…
20. Therefore, in a fact situation of the present nature
when the process of conversion had commenced
and certain steps were taken in that direction, even
if the redemption date is kept in view and the clause
in Schedule J indicating that redemption value shall
constitute a debt outstanding is taken note of; when
certain transactions were discussed between the
parties and had not concluded since the point as
to whether it was 30% of the equity shares in the
company or 10% by applying proper formula had
not reached a conclusion and thereafter agreed or
disagreed, it would not have been appropriate to hold
that there is default and admit the petition merely
because a claim was made by Kotak Venture as per
the originally agreed date and a petition was filed.
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In the process of consideration to be made by the
adjudicating authority the facts in the particular case
are to be taken into consideration before arriving at
a conclusion as to whether a default has occurred
even if there is a debt in strict sense of the term,
which exercise in the present case has been done
by the adjudicating authority.
21. In such circumstance if the adjudicating authority
finds from the material available on record that
the situation is not yet ripe to call it a default,
that too if it is satisfied that it is profit making
company and certain other factors which need
consideration, appropriate orders in that regard
would be made; the consequence of which could
be the dismissal of the petition under Section 7
of IB Code on taking note of the stance of the
corporate debtor. As otherwise if in every case
where there is debt, if default is also assumed and
the process becomes automatic, a company which
is ably running its administration and discharging
its debts in planned manner may also be pushed to
the corporate insolvency resolution process and get
entangled in a proceeding with no point of return.
Therefore, the adjudicating authority certainly would
make an objective assessment of the whole situation
before coming to a conclusion as to whether the
petition under Section 7 of IB Code is to be admitted
in the factual background. Dr Singhvi, however
contended, that when it is shown the debt is due
and the same has not been paid the adjudicating
authority should record default and admit the petition.
He contends that even in such situation the interest
of the corporate debtor is not jeopardised inasmuch
as the admission orders made by the adjudicating
authority are appealable to NCLAT and thereafter
to the Supreme Court where the correctness of the
order in any case would be tested. We note, it cannot
be in dispute that so would be the case even if the
adjudicating authority takes a view that the petition
[2026] 1 S.C.R. 879

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

is not ripe to be entertained or does not constitute
all the ingredients, more particularly default, to admit
the petition, since even such order would remain
appealable to NCLAT and the Supreme Court where
the correctness in that regard also will be examined.”
12.8. Applying the aforesaid principles to the present case, the
Corporate Debtor admittedly possesses no adjudicated or
realisable claim exceeding the amount in default. Its reliance
on business viability, unsold inventory, project status, or
anticipated receivables does not constitute “good reasons”
in law to defer or deny admission of CIRP.
12.9. The existence of a financial debt owed to EARCL is undisputed.
Persistent defaults stand admitted and are conclusively
established on record, including breach of the restructuring
agreement and failure to pay instalments within the stipulated
cure period. The restructuring arrangement failed due to
non-payment by the Corporate Debtor, thereby triggering an
express event of default under its terms.
12.10. Any alleged non-cooperation by EARCL occurred subsequent
to the default and cannot absolve the Corporate Debtor of
its admitted failure to comply with its payment obligations.
The NCLAT correctly held that considerations such as
ongoing operations, partial project completion, or anticipated
receivables are extraneous to the statutory mandate under
Section 7.
12.11. The contention that EARCL misused the Code as a recovery
tool is equally untenable. The Code does not prohibit a
financial creditor from invoking CIRP merely because recovery
proceedings under the SARFAESI Act or before the DRT are
pending or have been initiated. Section 238 accords overriding
effect to the Code, and upon admission, the moratorium under
Section 14 stays all such proceedings.
12.12. Allegations of mala fide invocation can be examined only
within the framework of Section 65 of the Code, which
requires specific pleadings and proof of abuse of process
by the Corporate Debtor. No such case has been pleaded
or established on the facts of the present case.
880 [2026] 1 S.C.R.

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12.13. In Kotak Mahindra Bank Ltd. v. A. Balakrishnan and
another20, this Court held that the trigger point for CIRP is
default, and that even a recovery certificate constitutes a
fresh cause of action for initiation of insolvency proceedings.
The mere pendency of parallel recovery proceedings does
not establish mala fides unless abuse under Section 65 is
demonstrated. The following paragraphs are apposite in this
context:
“40. From the scheme of the IBC, it could be seen
that where any corporate debtor commits a default,
a financial creditor, an operational creditor or the
corporate debtor itself is entitled to initiate CIRP in
respect of such corporate debtor in the manner as
provided under the said Chapter. The default has
been defined to mean non-payment of debt. The
debt has been defined to mean a liability or obligation
in respect of a claim which is due from any person
and includes a financial debt and operational debt.
A claim means a right to payment, whether or not
such right is reduced to judgment, fixed, disputed,
etc. It is more than settled that the trigger point
to initiate CIRP is when a default takes place. A
default would take place when a debt in respect
of a claim is due and not paid. A claim would
include a right to payment whether or not such
a right is reduced to judgment.”
“54. In any case, we have already discussed
hereinabove that the trigger point for initiation of
CIRP is default of claim. “Default” is non-payment
of debt by the debtor or the corporate debtor, which
has become due and payable, as the case may be,
a “debt” is a liability or obligation in respect of a
claim which is due from any person, and a “claim”
means a right to payment, whether such a right is
reduced to judgment or not. It could thus be seen that
unless there is a “claim”, which may or may not be

20 (2022) 9 SCC 186
[2026] 1 S.C.R. 881

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

reduced to any judgment, there would be no “debt”
and consequently no “default” on non-payment of
such a “debt”. When the “claim” itself means a right
to payment, whether such a right is reduced to a
judgment or not, we find that if the contention of the
respondents, that merely on a “claim” being fructified
in a decree, the same would be outside the ambit
of clause (8) of Section 5 IBC, is accepted, then it
would be inconsistent with the plain language used
in the IBC. As already discussed hereinabove, the
definition is inclusive and not exhaustive. Taking
into consideration the object and purpose of the
IBC, the legislature could never have intended
to keep a debt, which is crystallised in the form
of a decree, outside the ambit of clause (8) of
Section 5 IBC.
55. Having held that a liability in respect of a claim
arising out of a recovery certificate would be a
“financial debt” within the ambit of its definition under
clause (8) of Section 5 IBC, as a natural corollary
thereof, the holder of such recovery certificate would
be a financial creditor within the meaning of clause
(7) of Section 5 IBC. As such, such a “person” would
be a “person” as provided under Section 6 IBC who
would be entitled to initiate the CIRP.
56. Insofar as the contention of the respondents with
regard to clause (a) of sub-section (1) of Section 14
IBC is concerned, we do not find that the words used
in clause (a) of sub-section (1) of Section 14 IBC
could be read to mean that the decree-holder is not
entitled to invoke the provisions of the IBC for initiation
of CIRP. A plain reading of the said Section would
clearly provide that once CIRP is initiated, there shall
be prohibition for institution of suits or continuation of
pending suits or proceedings against the corporate
debtor including execution of any judgment, decree or
order in any court of law, tribunal, arbitration panel or
other authority. The prohibition to institution of suit
or continuation of pending suits or proceedings
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including execution of decree would not mean
that a decree-holder is also prohibited from
initiating CIRP, if he is otherwise entitled to in
law. The effect would be that the applicant, who
is a decree-holder, would himself be prohibited
from executing the decree in his favour.”
12.14. The above position was reiterated in Tottempudi Salalith v.
SBI21. Relying upon Kotak Mahindra, this Court held as
follows:
“20. On behalf of the appellant, submissions have
been made that the banks having approached the
DRT, were barred under the doctrine of election
from approaching NCLT for recovery of same set
of debts. This is a doctrine embodied in the law of
evidence, which bars prosecution of the same right
in two different fora based on the same cause of
action. But so far as the present appeal is concerned,
the recovery proceedings before the DRT had
commenced in the year 2014. At that point of time,
IBC had not come into existence. Moreover, it has
been held by this Court in Kotak Mahindra-1 [Kotak
Mahindra Bank Ltd. v. A. Balakrishnan, (2022) 9 SCC
186 : (2022) 4 SCC (Civ) 548] that the recovery
certificate itself would give rise to a fresh cause
of action entitling a financial creditor to initiate
Corporate Insolvency Resolution Process (CIRP).
By this judgment, the right of the financial creditor
to invoke the mechanism under IBC after issue
of recovery certificate stood acknowledged as
a valid legal course. This Court, in that case also
dealt with the question of instituting a CIRP on the
strength of recovery certificate. Needless to add,
such recovery certificate arose out of a proceeding
from the DRT. The enforcement mechanism for a
recovery certificate is an independent course, which
a financial creditor may opt for realisation of its dues

21 (2024) 1 SCC 24
[2026] 1 S.C.R. 883

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

crystalised under the 1993 Act, instead of chasing
the mechanism under the 1993 Act.
21. IBC itself is not really a debt recovery
mechanism but a mechanism for revival of
a company fallen in debt, but the procedure
envisaged in IBC substantially relates to ensuring
recovery of debts in the process of applying such
mechanism. The question of election between the
fora for enforcement of debt under the 1993 Act
and initiation of CIRP under IBC arises only after a
recovery certificate is issued. The reliefs under the
two statutes are different and once CIRP results
in declaration of moratorium, the enforcement
mechanism under the 1993 Act or the SARFAESI Act
gets suspended. In such circumstances, after issue
of recovery certificate, the financial creditor ought
to have option for enforcing recovery through a new
forum instead of sticking on to the mechanism through
which recovery certificate was issued. In Transcore v.
Union of India [Transcore v. Union of India, (2008)
1 SCC 125 : (2008) 1 SCC (Civ) 116], application of
SARFAESI mechanism was held permissible even
though the subject-proceeding was instituted under
the 1993 Act.
22. Thus, the doctrine of election cannot be applied
to prevent the financial creditors from approaching
NCLT for initiation of CIRP.”
12.15. Further, in Haldiram Incorporation (P) Ltd. v. Amrit
Hatcheries (P) Ltd.22, this Court upheld proceedings under
the SARFAESI Act even where sale concluded shortly before
the moratorium. While we express our strong disapproval of
lenders pursuing parallel proceedings after having approached
the NCLT, such conduct, though deprecated, is not illegal per
se. What is prohibited is malicious recovery within the meaning
of Section 65, and not recovery in the traditional sense.

22 2023 SCC OnLine SC 1706
884 [2026] 1 S.C.R.

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12.16. The concept of revival under the IBC does not exclude
recovery altogether; it excludes abuse of insolvency as a
pressure tactic. The Adjudicating Authority retains a crucial
gatekeeping role at later stages, particularly at the time of
approval of the resolution plan, to ensure compliance with the
Code while respecting the primacy of the commercial wisdom
of the Committee of Creditors.
12.17. In Karad Urban Cooperative Bank Limited v. Swwapnil
Bhingardevay and others 23, this Court reiterated that
questions relating to feasibility and viability fall squarely
within the domain of the CoC, and cannot be examined at
the threshold stage. The following paragraphs are relevant
in this regard:
“12. We have carefully considered the rival
submissions. On the first question regarding the
viability and feasibility of a resolution plan, the law is
now wellsettled. In K. Sashidhar v. Indian Overseas
Bank, (2019) 12 SCC 150, it was held as follows:
“52…There is an intrinsic assumption
that financial creditors are fully informed
about the viability of the corporate debtor
and feasibility of the proposed resolution
plan…The opinion on the subject matter
expressed by them after due deliberations
in the CoC meetings through voting, as
per voting shares, is a collective business
decision. The legislature, consciously, has
not provided any ground to challenge the
“commercial wisdom” of the individual
financial creditors or their collective
decision before the adjudicating authority.
That is made non-justiciable.
…
57…The provisions investing jurisdiction
and authority in NCLT or NCLAT as noticed

23 (2020) 9 SCC 729
[2026] 1 S.C.R. 885

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

earlier, have not made the commercial
decision exercised by CoC of not approving
the resolution plan or rejecting the same,
justiciable. This position is reinforced
from the limited grounds specified for
instituting an appeal that too against an
order “approving a resolution plan” under
Section 31.
58…Further, the jurisdiction bestowed
upon the appellate authority (NCLAT)
is also expressly circumscribed. It can
examine the challenge only in relation to
the grounds specified in Section 61(3) of
the I&B Code, which is limited to matters
“other than” enquiry into the autonomy
or commercial wisdom of the dissenting
financial creditors.
…
64…At best, the adjudicating authority
(NCLT) may cause an enquiry into the
“approved” resolution plan on limited
grounds referred to in Section 30(2)
read with Section 31(1) of the I&B Code.
It cannot make any other inquiry nor
is competent to issue any direction in
relation to the exercise of commercial
wisdom of the financial creditors — be it
for approving, rejecting or abstaining, as
the case may be. Even the inquiry before
the appellate authority (NCLAT) is limited
to the grounds under Section 61(3) of the
I&B Code. It does not postulate jurisdiction
to undertake scrutiny of the justness of the
opinion expressed by financial creditors at
the time of voting.”
13. Thereafter, in Essar Steel (India) Ltd. Committee
of Creditors v. Satish Kumar Gupta, (2020) 8 SCC
531, this Court held:
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“67…Thus, it is clear that the limited
judicial review available, which can in no
circumstance trespass upon a business
decision of the majority of the Committee of
Creditors, has to be within the four corners
of Section 30(2) of the Code, insofar as
the Adjudicating Authority is concerned,
and Section 32 read with Section 61(3) of
the Code, insofar as the Appellate Tribunal
is concerned.
…
73…Thus, while the Adjudicating
Authority cannot interfere on merits
with the commercial decision taken by
the Committee of Creditors, the limited
judicial review available is to see that
the Committee of Creditors has taken
into account the fact that the corporate
debtor needs to keep going as a going
concern during the insolvency resolution
process; that it needs to maximise the
value of its assets; and that the interests
of all stakeholders including operational
creditors has been taken care of.”
14. The principles laid down in the aforesaid decisions,
make one thing very clear. If all the factors that need
to be taken into account for determining whether
or not the corporate debtor can be kept running
as a going concern have been placed before the
Committee of Creditors and the CoC has taken a
conscious decision to approve the resolution plan,
then the adjudicating authority will have to switch
over to the hands off mode. It is not the case of the
corporate debtor or its promoter/Director or anyone
else that some of the factors which are crucial for
taking a decision regarding the viability and feasibility,
were not placed before the CoC or the Resolution
Professional. The only basis for the corporate debtor
[2026] 1 S.C.R. 887

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

to raise the issue of viability and feasibility is that the
ownership and possession of the ethanol plant and
machinery is the subject matter of another dispute
and that the resolution plan does not take care of
the contingency where the said plant and machinery
may not eventually be available to the Successful
Resolution Applicant.”
Thus, if the CoC approves a resolution plan in derogation of the
objectives, scheme, and ethos of the Code, the NCLT is not rendered
powerless at the stage of approval. The contention of the Corporate
Debtor that the respondent – Financial Creditor is merely seeking
recovery is, therefore, wholly untenable in law.
12.18. The NCLAT, upon a detailed examination of the material
on record, found that the Corporate Debtor had persistently
acknowledged defaults under both the sanction letters and the
restructuring agreement. It further noted that the Corporate
Debtor was facing acute financial distress, had failed to comply
with regulatory requirements, was unable to obtain mandatory
compliance certificates, and could not sell units at prevailing
market rates despite multiple attempts. Even according to
another creditor, SBI, which had advanced money under the
SWAMIH Fund, a public fund sponsored by taxpayers for
the completion of stalled projects, the Corporate Debtor had
refused to cooperate in relation to completion of the project
as well as adherence to the repayment schedule. These
circumstances, taken cumulatively, substantiated EARCL’s
request for initiation of CIRP.
12.19. The NCLAT further held that EARCL’s revocation of the
restructuring arrangement was contractually justified owing
to the Corporate Debtor’s failure to pay instalments. The
breach of the restructuring terms triggered express events of
default under the relevant clauses, thereby entitling EARCL
to recall the entire outstanding liability. Despite repeated
reminders, the Corporate Debtor failed to cure the defaults
within the stipulated cure period, and EARCL was under no
legal or contractual obligation to reopen or renegotiate the
restructuring.
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12.20. The NCLAT rejected the plea of mala fide invocation, observing
that acceptance of such argument would render lenders
effectively remediless. It also rejected the contention that the
Corporate Debtor’s alleged viability could excuse non-payment
of admitted dues, noting that financial distress was manifest
from the continuing and acknowledged defaults.
12.21. The debt and default having been conclusively established,
and the narrow exception carved out in Vidarbha Industries
being clearly inapplicable, the NCLAT was fully justified in
admitting the Corporate Debtor into the CIRP. The NCLT’s
refusal was contrary to the settled law and the statutory
mandate of Section 7.
12.22. Accordingly, the impugned judgment admitting the Corporate
Debtor into the CIRP does not suffer from any legal infirmity.
13. Question No. 2 – Rejection of the Intervention Application filed
by the Society
13.1. While it is undisputed that individual homebuyers are financial
creditors within the meaning of the IBC, the core question that
arises for determination is whether a society or association of
homebuyers possesses locus standi to intervene in proceedings
under Section 7 of the Code, either at the admission stage or
at the appellate stage.
13.2. The appellant Society contends that it represents the collective
interest of the allottees, membership being mandatory under
its bye-laws. It is urged that the summary rejection of its
intervention application by the NCLAT violates the principles
of natural justice and leaves homebuyers, particularly minority
financial creditors, remediless in the CIRP. It is further argued
that the distinction drawn by the NCLAT between completed and
uncompleted towers is artificial, arbitrary, and unsustainable.
13.3. Per contra, EARCL submits that the Society lacks locus
standi, it being neither a financial creditor under Section 5(7)
nor an operational creditor under Section 5(20) of the Code.
The Society is not a party to any transaction documents, has
no privity of contract with EARCL, and does not qualify as
a recognised stakeholder under the statutory framework of
the IBC.
[2026] 1 S.C.R. 889

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

13.4. It is further submitted that the Society is a promoter-controlled
maintenance entity constituted for the upkeep of a completed
tower, and not a representative body of all homebuyers in the
project. No registration certificate, general body resolution,
minutes, or document evidencing collective authorisation has
been produced to substantiate any representative capacity.
13.5. The issue of locus at the Section 7 stage is no longer res
integra. In GLAS Trust Company, this Court held that while
there is no rigid requirement restricting the right to appeal
only to the applicant creditor and the corporate debtor, such
latitude applies when proceedings are in rem post-admission of
CIRP. At the pre-admission stage, proceedings under Section
7 remain in personam, and neither the Adjudicating Authority
nor the Appellate Authority is required to hear other creditors,
much less unrelated third parties. When proceedings are in
personam, no right of audience inheres in persons who are
strangers to the debt and default forming the basis of the
application. The relevant paragraphs are reproduced below:
“(b) Insights from the evolution of the legal
framework
63. In essence, after a series of deliberations by the
legislature, the executive and nudges by this Court,
the framework created by Rule 8 of the NCLT Rules
and Section 12-A IBC read with Rule 30-A of the CIRP
Regulations lays down an exhaustive procedure for
the withdrawal of an application filed by creditors
under Sections 7, 9, or 10 IBC. Withdrawal may be
sought at four stages, all of which have a procedure
prescribed under the existing framework. These may
be summarised as follows:
63.1. Before the application under Sections 7, 9 or
10 is admitted by NCLT: Such cases are squarely
covered by Rule 8 of the NCLT Rules, which requires
that the applicant approach NCLT directly. NCLT may
then pass an order permitting the withdrawal of the
application. At this stage, as CIRP process has
not been initiated, the proceedings are still in
personam, as between the applicant creditor and
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the corporate debtor. Therefore, while approving
the withdrawal at this stage, NCLT may restrict its
enquiry to only hear the applicant creditor and
corporate debtor, and other potential creditors
are not stakeholders at this stage.
63.2.……
75. The provision stipulates that “any person” who is
aggrieved by the order of NCLAT may file an appeal
before the Supreme Court within the prescribed
limitation period. Similar language is used in Section
61 IBC, which provides for appeals to NCLAT from
orders of NCLT.24 The use of the phrase “any person
aggrieved” indicates that there is no rigid locus
requirement to institute an appeal challenging an order
of NCLT, before NCLAT or an order of NCLAT, before
this Court. Any person who is aggrieved by the order
may institute an appeal, and nothing in the provision
restricts the phrase to only the applicant creditor and
the corporate debtor. As noted above, once CIRP is
initiated, the proceedings are no longer restricted to
the individual applicant creditor and the corporate
debtor but rather become collective proceedings (in
rem), where all creditors, such as the appellant, are
necessary stakeholders. The appellant is not an
unrelated party to CIRP, but is in fact, an entity
whose claims had been verified by the IRP vide
letter dated 19-8-2024. The appellant who claims to
be a financial creditor, has expressed reasonable
apprehensions about the prejudice it would face
if there were roundtripping of the funds, and the
prioritisation of the debts of the second respondent,
an operational creditor.”
13.6. This position was reiterated in Independent Sugar Corpn.
Ltd. v. Hindustan National Gas & Industries Ltd. (Resolution

24 “61. Appeals and appellate authority.—(1) Notwithstanding anything to the contrary contained under
the Companies Act, 2013 (18 of 2013), any person aggrieved by the order of the adjudicating authority
under this part may prefer an appeal to the National Company Law Appellate Tribunal.” (emphasis
supplied)
[2026] 1 S.C.R. 891

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

Professional)25. Though the said case concerned the locus
of a failed resolution applicant, the Court reaffirmed that
participatory rights depend upon the stage of the proceedings
and that, even otherwise, a party must demonstrate legally
cognizable prejudice and cannot be a complete stranger to
the insolvency process. The relevant paragraph is extracted
for reference:
“24. Once the CIRP is initiated, the nature of
proceedings are no longer in personam but
rather become in rem. In light of the same, the
expression “any person aggrieved” in the context of
IBC has been held to be indicative of there being
no rigid locus requirements to institute an appeal
challenging an order of NCLT before NCLAT or an
order of NCLAT before this Court. [GLAS Trust Co.
LLC v. Byju Raveendran, (2025) 3 SCC 625 : (2024)
247 Comp Cas 687] Similarly, in the context of the
Competition Act, even those persons that bring to
CCI information of practices that are contrary to the
provisions of the Competition Act, could be said to be
“aggrieved”. [Samir Agrawal v. CCI (Cab Aggregators
Case), (2021) 3 SCC 136] Therefore, the term “any
person aggrieved” appearing in Section 62 IBC
and Section 53-T of the Competition Act must be
understood widely and not in a restricted fashion.
25. In the present case, the appellant as an
unsuccessful resolution applicant whose resolution
plan could have otherwise been approved by CoC,
satisfies the requirement of being aggrieved. This
preliminary locus standi objection vis-à-vis the
appellant, therefore, does not merit acceptance.”
13.7. The IBC is a self-contained code which confers participatory
rights only on persons falling within statutorily defined
categories. A financial creditor under Section 5(7) must
be a person to whom a financial debt is owed. While the
Explanation to Section 5(8)(f) deems individual allottees

25 (2025) 5 SCC 209
892 [2026] 1 S.C.R.

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to be financial creditors, it does not extend such status to
societies or associations unless the entity is itself a creditor
in its own right, or is statutorily recognised as an authorised
representative under the Code.
13.8. A society is a distinct juristic entity separate from its members.
Unless it has itself advanced funds, executed allotment
agreements, or received allotments, it cannot claim financial
creditor status. The right to initiate or participate in CIRP flows
from the debt transaction and the statute, not from associative
or representational interest.
13.9. Homebuyers’ societies or welfare associations are ordinarily
constituted for maintenance and management of common
facilities. Their office-bearers cannot litigate on behalf of
allottees or claim representative status before adjudicatory
fora absent explicit statutory recognition or legally valid
authorisation.
13.10. Any contrary interpretation would impermissibly enlarge the
statutory definition of “financial creditor”, encroach upon
individual rights of allottees, and create an extra-statutory
layer of representation. It would also enable errant corporate
debtors to obstruct and delay insolvency proceedings under
the guise of purported collective interests – an abuse expressly
cautioned against in Pioneer Urban Land.
13.11. Proceedings under Section 7 are essentially bipartite at the
admission stage, involving only the financial creditor and
the corporate debtor. Unrelated third parties including other
creditors, have no independent right of audience at this stage,
a principle consistently affirmed by this Court.
13.12. Collective representation of homebuyers is statutorily regulated
and arises only after admission of CIRP through the authorised
representative mechanism under Section 21(6A) read with
Regulation 16A of the CIRP Regulations. The Code does not
contemplate ad hoc or self-appointed representation at the
pre-admission or appellate stage. In the context of real estate
allottees, Section 7 itself mandates that an application must
be filed jointly by the prescribed number of allottees and not
through any authorised representative, much less through a
non-party housing society formed for maintenance purposes.
[2026] 1 S.C.R. 893

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

13.13. In Phoenix ARC Pvt. Ltd v. Spade Financial Services
Ltd.26, this Court reiterated that financial creditor status
must be determined strictly with reference to the nature of
the transaction and cannot be conferred by implication or
association.
13.14. Though in Chitra Sharma, homebuyer associations were
permitted to participate, such intervention was exceptional,
grounded in Article 142 of the Constitution, and cannot be
treated as a precedent conferring general locus on societies
in statutory insolvency proceedings.
13.15. Rule 11 of the NCLAT Rules preserves inherent powers to
meet the ends of justice. However, such powers are residual
and cannot override the statutory structure of the Code or
create substantive participatory rights where the statute
deliberately excludes them. In this context, reference was
made to the decision in GLAS Trust Company, wherein, it
was held as follows:
“(iii) Scope of “inherent powers” under Rule 11
67. Section 151 of the Code of Civil Procedure (“CPC”)
reads as follows:
“151. Saving of inherent powers of
Court.—Nothing in this Code shall be
deemed to limit or otherwise affect the
inherent power of the Court to make such
orders as may be necessary for the ends of
justice or to prevent abuse of the process
of the Court.”
68. Rule 11 of the NCLT Rules, 2016 and Rule 11 of
the NCLAT Rules, 2016, which preserve the inherent
powers of NCLT and NCLAT, respectively, mirror
Section 151CPC and read as follows:
“11. Inherent powers.—Nothing in these
Rules shall be deemed to limit or otherwise
affect the inherent powers of the Appellate
Tribunal to make such orders or give such

26 (2021) 3 SCC 475
894 [2026] 1 S.C.R.

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directions as may be necessary for meeting
the ends of justice or to prevent abuse of
the process of the Appellate Tribunal.”
69. In a consistent line of precedent, this Court has
held that “inherent powers” may be exercised in
cases where there is no express provision under
the legal framework. However, such powers cannot
be exercised in contravention of, conflict with or in
ignorance of express provisions of law. We may
helpfully refer to the observations of a two-Judge
Bench of this Court in one such case. In Ram Chand
& Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava
[Ram Chand & Sons Sugar Mills (P) Ltd. v. Kanhayalal
Bhargava, (1967) 37 Comp Cas 42 : 1966 SCC
OnLine SC 215] a two-Judge Bench of this Court,
speaking through K. Subba Rao, J. (as the learned
Chief Justice then was), opined : (SCC OnLine SC
para 5)
“5. … Having regard to the said decisions,
the scope of the inherent power of a court
under Section 151 of the Code may be
defined thus: The inherent power of a court
is in addition to and complementary to
the powers expressly conferred under the
Code. But that power will not be exercised
if its exercise is inconsistent with, or
comes into conflict with, any of the powers
expressly or by necessary implication
conferred by the other provisions of the
Code. If there are express provisions
exhaustively covering a particular topic,
they give rise to a necessary implication
that no power shall be exercised in respect
of the said topic otherwise than in the
manner prescribed by the said provisions.
Whatever limitations are imposed by
construction on the provisions of Section
151 of the Code, they do not control the
undoubted power of the Court conferred
[2026] 1 S.C.R. 895

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

under Section 151 of the Code to make a
suitable order to prevent the abuse of
the process of the Court.”
(emphasis supplied)

70. When a procedure has been prescribed for
a particular purpose exhaustively, no power
shall be exercised otherwise than in the manner
prescribed by the said provisions. In such cases,
the court must be circumspect in invoking its
“inherent powers” to deviate from the prescribed
procedure. If such deviation is made, the court
must justify why this was necessary to “prevent
the abuse of the process of the Court”.
71. The need to be circumspect while invoking
“inherent powers”, when there is an exhaustive legal
framework is amplified in the context of a legislation
like the IBC. In Ebix Singapore (P) Ltd. v. Educomp
Solutions Ltd. (CoC) [Ebix Singapore (P) Ltd. v.
Educomp Solutions Ltd. (CoC), (2022) 2 SCC 401 :
(2022) 1 SCC (Civ) 586 : (2022) 231 Comp Cas 110],
a two-Judge Bench of this Court, speaking through
one of us (D.Y. Chandrachud, J.), affirmed this position
and observed as follows: (SCC p. 481, para 101)
“101. Any claim seeking an exercise of
the adjudicating authority’s residuary
powers under Section 60(5)(c) IBC,
NCLT’s inherent powers under Rule 11
of the NCLT Rules, 2016 or even the
powers of this Court under Article 142
of the Constitution must be closely
scrutinised for broader compliance
with the insolvency framework and its
underlying objective. The adjudicating
mechanisms which have been
specifically created by the statute,
have a narrowly defined role in the
process and must be circumspect in
granting reliefs that may run counter
896 [2026] 1 S.C.R.

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to the timeliness and predictability that
is central to IBC. Any judicial creation of
a procedural or substantive remedy that
is not envisaged by the statute would not
only violate the principle of separation of
powers, but also run the risk of altering the
delicate coordination that is designed by
IBC framework and have grave implications
on the outcome of CIRP, the economy of
the country and the lives of the workers
and other allied parties who are statutorily
bound by the impact of a resolution or
liquidation of a corporate debtor.”
13.16. As clarified in GLAS Trust Company, invocation of Rule 11
to oppose admission of a Section 7 petition is impermissible
once debt and default are established. The inherent power
preserved under Rule 11 does not confer a substantive
right of participation where the statute has consciously and
deliberately excluded it.
13.17. In the present case, the appellant Society is neither a financial
nor an operational creditor. It is a maintenance society not
constituted for insolvency representation. No documentary
proof of registration, collective authorisation, or general body
resolution has been produced. Membership is automatic and
mandatory, negating consensual representation. Reliance on
compulsory membership to claim representational authority on
behalf of allottees is nothing but a brutm fulmen. Notably, the
intervention application was filed only at the appellate stage
and not before the NCLT. The Society is not a party to the
financial transaction forming the substratum of the Section
7 application. Hence, no statutory right of appeal inheres in
the appellant.
13.18. While the NCLAT’s distinction between completed and
uncompleted towers may be overbroad and untenable, the
ultimate conclusion on absence of locus standi rests on sound
legal footing. Permitting such intervention would undermine the
expeditious and structured insolvency framework envisaged
under the Code.
[2026] 1 S.C.R. 897

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

13.19. The plea of violation of principles of natural justice is equally
untenable. It is settled that such violation cannot be alleged
in the absence of demonstrable prejudice, particularly where
no foundational right of participation exists. Reference may
be made to Bishambhar Prasad v. Arfat Petrochemicals
Pvt. Ltd. and others27, the relevant paragraphs of which are
usefully extracted below:
“77. The importance of Principles of Natural Justice,
among which we are concerned with audi alterem
partem in this case, have been deliberated upon by
this Court numerous times in the past. As far back
as in Union of India v. P.K. Roy (1968) 2 SCR 186,
the Court held:
“12…But the extent and application of
the doctrine of natural justice cannot
be imprisoned within the strait-jacket
of a rigid formula. The application of
the doctrine depends upon the nature
of the jurisdiction conferred on the
administrative authority, upon the
character of the rights of the persons
affected, the scheme and policy of the
statute and other relevant circumstances
disclosed in the particular case…”
78. Further, in A.K. Kraipak v. Union of India (1969) 2
SCC 262, the nature of an administrative power and
the obligations reposed upon the State to function in
a just and fair manner was explained:
“13. The dividing line between an
administrative power and a quasi-judicial
power is quite thin and is being gradually
obliterated. For determining whether a
power is an administrative power or a
quasi-judicial power one has to look to
the nature of the power conferred, the

27 2023 SCC OnLine SC 458
898 [2026] 1 S.C.R.

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person or persons on whom it is conferred,
the framework of the law conferring that
power, the consequences ensuing from the
exercise of that power and the manner
in which that power is expected to be
exercised. Under our Constitution the rule
of law pervades over the entire field of
administration. Every organ of the State
under our Constitution is regulated and
controlled by the rule of law. In a welfare
State like ours it is inevitable that the
jurisdiction of the administrative bodies
is increasing at a rapid rate. The concept
of rule of law would lose its vitality if
the instrumentalities of the State are not
charged with the duty of discharging
their functions in a fair and just manner.
The requirement of acting judicially in
essence is nothing but a requirement to
act justly and fairly and not arbitrarily or
capriciously. The procedures which are
considered inherent in the exercise of
a judicial power are merely to facilitate
if not ensure a just and fair decision.
In recent years the concept of quasi-
judicial power has been undergoing a
radical change. What was considered
as an administrative power some years
back is now being considered as a
quasi-judicial power…”
79. In this context, it may be true that the Principles
of Natural Justice entailed giving Respondent No.
1 an opportunity to defend its rights. However, the
most decisive and crucial factor is whether any
legally vested ‘right’ ever accrued in favour of
Respondent No. 1, which the State Government
could not have despoiled behind its back. It has
already been held by us categorically that RIICO
had no authority whatsoever to accord permission
[2026] 1 S.C.R. 899

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

for conversion and sub-division of the industrial land
allotted to Respondent No. 1. We have further opined
that the State Government has always retained its
authority as lessor and was the only competent
authority to grant such permissions to Respondent
No. 1 within the framework of the 1959 Rules. The
irresistible conclusion would be that the self-
styled power exercised by RIICO, was without
any sanction in law; it lacked inherent competence
and RIICO acted beyond its jurisdiction in respect
of LIA, Kota. The permissions accorded by RIICO
in favour of Respondent No. 1 did not confer any
rights whatsoever, much less any enforceable right
in the eyes of law. RIICO usurped the powers vested
in the State Government and passed palpably illegal
orders in favour of Respondent No. 1. The agreements
between RIICO and Respondent No. 1 are nothing
but brutum fulmen.”
13.20. Accordingly, in the instant case, in the absence of any
foundational right to participate in the proceedings before
NCLT or NCLAT, the appellant society cannot claim a vested
right to be heard at the appellate stage, for such right flows
from the statute and is not a matter of right.
13.21. Even otherwise, no prejudice is demonstrated:
• Homebuyers already in possession stand outside the
insolvency estate.
• Pending allottees are recognised financial creditors who
are entitled to file claims and participate in the CoC
through authorised representatives.
• Regulation 4E protects possession subject to 66% CoC
approval.
• Any approved resolution plan binds all stakeholders and
ensures equitable treatment.
• RERA rights stand harmonized with the IBC, as held
by this Court in Pioneer Urban Land and Mansi Brar
Fernandez.
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13.22. Accordingly, we hold that
• The right to initiate or participate in insolvency proceedings
is statutory, not equitable.
• A society or Resident Welfare Association, not being
a creditor in its own right and not recognised as an
authorised representative of allottees under the IBC,
has no locus standi to intervene in proceedings arising
out a Section 7 petition.
• The NCLAT was justified in rejecting the Society’s
intervention application.
• No prejudice has been caused to homebuyers, whose
interests are adequately safeguarded under the Code.
14. At this juncture, we may aptly refer to the decision in Mansi Brar
Fernandes v. Shubha Sharma and another28, wherein while dealing
with the growing misuse of the insolvency framework by speculative
investors in real estate projects, this Bench revisited, reiterated,
and consolidated the settled principles governing the interplay
between RERA, the Consumer Protection Act, and the IBC. In the
said decision, the Court not only underscored the primacy of sector-
specific remedies in real estate disputes but also issued a series
of consequential directions, recognising the right to shelter as an
integral facet of the right to life under Article 21 of the Constitution.
The following paragraphs are apposite and merit extraction:
“15.2. In this necessary in this backdrop to reiterate certain
settled principles:
• RERA remains the primary forum for redressal of
homebuyers’ grievances;
• The IBC is a forum of last resort, intended to secure
revival and completion of viable projects, not to serve
as a debt recovery mechanism; and
• Consumer forums should confine themselves to
adjudicating individual service deficiencies, thereby
avoiding conflicting or overlapping orders across
multiple fora.

28 2025 INSC 1110
[2026] 1 S.C.R. 901

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

15.4. Strict adherence to IBC timelines and settled
precedent is imperative to realise two complementary
objectives:
(i)ensuring revival and completion of stalled projects for
the benefit of genuine homebuyers; and
(ii)curbing speculative activity which has functioned as a
“slow poison” for the residential real estate sector and, by
extension, the Indian middle class.
18.3.1. The Court further noted that remedies under RERA
and the Consumer Protection Act are additional, not
exclusive. Both statutes operate alongside the IBC, but
with distinct purposes: RERA protects individual investors
by enforcing compliance with project obligations, while the
IBC operates in rem to revive the corporate debtor and
maximise value for all stakeholders.
18.3.2. Importantly, Pioneer Urban held that once a prima
facie default is established under Section 7 of the Code,
the burden shifts onto the developer to demonstrate
that the applicant is a defaulter, or that the process has
been invoked fraudulently, with malicious intent, or by a
speculative investor. These safeguards were intended to
prevent “trigger-happy” investors from destabilising projects
or prematurely driving developers into insolvency.
21.2. In exercise of this Court’s jurisdiction, and to advance
the constitutional and statutory objectives, the following
directions are issued to the concerned authorities, in the
larger interests of bona fide homebuyers and the stability
of the real estate sector, which demand coordinated action
by all stakeholders:
…
(6) Resolution of real estate insolvency should, as a
rule, proceed on a project specific basis rather than the
entire corporate debtor, unless circumstances justify
otherwise. This would protect solvent projects and genuine
homebuyers from collateral prejudice. IBBI shall also
devise a mechanism to enable handover of possession
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to willing allottees where substantial units in a project
are complete.
(8) Regulations shall ensure meaningful representation of
allottees in the CoC through authorized representatives,
with safeguards against conflicts of interest.”

Conclusion
15. For the foregoing reasons,
• The appeal challenging admission of the Corporate Debtor into
CIRP is dismissed.
• The appeal challenging rejection of the intervention application
is also dismissed, subject to the clarification on the limited scope
of locus standi and inherent powers.
It is clarified that upon commencement of CIRP, any aggrieved
stakeholder may avail remedies strictly in accordance with the Code.
15.1. While the commercial wisdom of the Committee of Creditors
is paramount and is not ordinarily amenable to judicial
review, the width of powers vested in the CoC carries with
it a corresponding duty of responsibility. Any extraordinary
or non-routine decision taken by the CoC must, therefore,
be supported by cogent reasons duly recorded in writing.
Accordingly, with a view to advancing transparency, ensuring
accountability, and safeguarding the interests of homebuyers,
we issue the following directions:
i) The Information Memorandum shall mandatorily disclose
comprehensive and complete details of all allottees; and
ii) Where the Committee of Creditors, upon due consideration,
finds it not viable to approve handover of possession in
terms of Regulation 4E of the CIRP Regulations, it shall
mandatorily record cogent and specific reasons in writing
for such decision.
iii) Any recommendation for liquidation by the Committee of
Creditors shall be accompanied by a reasoned justification
recorded in writing, evidencing proper application of
mind and due consideration of all viable alternatives, in
consonance with the objective of the Code.
[2026] 1 S.C.R. 903

Elegna Co-op. Housing and Commercial Society Ltd. v.
Edelweiss Asset Reconstruction Company Limited & Anr.

These directions shall operate prospectively and shall be complied
with forthwith.
16. There is no order as to costs. Pending application(s), if any, shall
stand disposed of in the above terms.

Result of the case: Appeals dismissed.

†
Headnotes prepared by: Nidhi Jain