January 2026

The Supreme Court held that in real estate projects, a single insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 may be maintainable against more than one corporate entity where the entities are intrinsically connected in the development, execution, marketing, and allotment of the project.

The Court considered the relationship between the developer entity and the marketing entity involved in dealing with allottees. It noted that common directors, overlapping communications, and a unified project structure may justify treating multiple entities as part of the same commercial arrangement for the purpose of insolvency proceedings.

The Court applied a practical approach and observed that homebuyers should not be forced into fragmented proceedings merely because the project was structured through multiple companies. Where two or more companies act together in relation to the same project, joint CIRP may be justified.

The National Company Law Tribunal, Mumbai held that funds routed through a promoter solely to satisfy conditions stipulated by a lending bank as a precondition for disbursing a project loan do not constitute a "deposit" within the meaning of the Insolvency and Bankruptcy Code. The NCLT distinguished such infusions from genuine financial debt, noting that they lacked the hallmarks of an independent lending transaction.

The funds were introduced not in the ordinary course of commercial dealing but as a regulatory workaround to unlock bank financing, and the promoter could therefore not claim the status of financial creditor in the insolvency proceedings.

The Allahabad High Court reiterated that the right to prosecute under Section 138 of the Negotiable Instruments Act is personal to the payee named on the cheque or to a holder in due course as defined under Section 9 of the Act. A third party who receives a dishonoured cheque through assignment or endorsement after the cause of action arises cannot initiate criminal proceedings under Section 138.

The court allowed the revision, holding that the complaint was not maintainable for want of locus standi, and emphasised that penal provisions must be construed strictly, with standing to complain confined to those expressly recognised by the statute.

The Delhi High Court refused to quash cheque dishonour proceedings only because the cheque signatory had been dropped from the case. The company remains the principal offender under Section 138, and directors may continue to face vicarious liability under Section 141 if the complaint contains foundational averments that they were in charge of the business.

The Court held that a suit for specific performance concerning shops already being used for business purposes falls within the Commercial Courts Act. Since the property was admittedly connected with trade and commerce, the regular civil court lacked jurisdiction and the plaint was liable to be returned for presentation before the Commercial Court.