NCLAT Confines Insolvency Proceedings Against Raheja Developers To Krishna Housing Scheme Project

The National Company Law Appellate Tribunal (NCLAT) at Delhi has confined the corporate insolvency resolution process (CIRP) against Raheja Developers Ltd. to its Krishna Housing Scheme project in Sohna, Gurugram, holding that proceedings initiated by homebuyers of the project are to be confined to that project.

The appellate tribunal noted that the National Company Law Tribunal (NCLT), by its order dated August 21, 2025, had admitted a Section 7 application filed by 130 homebuyers and initiated CIRP against the corporate debtor.

“As a sequel to the above discussion and in terms of Section 7 (5) (a) of the Code, the instant petition I.B./284/2025 stands admitted and CIRP of M/s. Raheja Developers Ltd. shall be initiated.”

Considering the issue, a bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra examined whether the CIRP initiated on the basis of the application filed by homebuyers of the Krishna Housing Scheme ought to be confined to that project.

The tribunal observed:

“We, however, are of the view that in view of this appeal being decided today and CIRP be confined to the Project “Krishna Housing Scheme”, the IRP is required to issue reference in pursuance to his earlier publication, requiring the claims to be confined to Project “Krishna Housing Scheme”. In the facts of the present case, we permit IRP to issue corrigendum inviting claims regarding “Krishna Housing Scheme” by granting further 14 days' time to claimant to file their claim.”

The appeal was filed by Navin M. Raheja, suspended director of Raheja Developers Ltd., against the admission of the Section 7 application filed by homebuyers led by Shravan Minocha in relation to the Krishna Housing Scheme.

The project, comprising 1,644 units in Sector 14, Sohna, Gurugram, was required to be completed by June 10, 2019. Upon failure to deliver possession, the homebuyers approached the NCLT, which admitted the application and initiated CIRP.

Before the appellate tribunal, the suspended director said he was ready to return the entire amount paid by the homebuyers within six months, along with 9% interest. The homebuyers, for their part, did not oppose the proposal, but asked that any payments be routed through the resolution professional to ensure transparency.

That position was resisted by other financial creditors. Edelweiss Asset Reconstruction Company and Punjab National Bank argued that the insolvency process should continue against the company, maintaining that once CIRP is admitted, any exit must follow the route laid down under Section 12A of the Insolvency and Bankruptcy Code.

After hearing all sides, the tribunal held that where both are tied to a specific real estate project, the insolvency process cannot travel beyond that project.

Consequently, the tribunal directed that the CIRP triggered by the Krishna Housing Scheme homebuyers will remain confined to that project. At the same time, it made it clear that creditors and homebuyers from other projects are free to pursue their remedies independently, in accordance with law.