CIRP Must Remain Confined To Single Project, Cannot Affect Other Projects: NCLAT New Delhi

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) at New Delhi, on 20 March 2026 held that a Corporate Insolvency Resolution Process (CIRP) initiated by the allottees of a single real estate project must stay confined to that project and cannot extend to other projects of the developer.

A Bench comprising Judicial Member Justice Ashok Bhushan and Technical Member Barun Mitra disposed of an appeal filed by the suspended director of Raheja Developers Ltd., Navin M. Raheja, against the NCLT, New Delhi. The NCLT had admitted a Section 7 application filed by the allottees of project Raheja Shilas (Low Rise). The Bench observed:

“Allottees being only to the project Raheja Shilas (Low Rise), the CIRP should confine to the project Raheja Shilas (Low Rise) only. We, thus, are satisfied that the impugned order needs to be modified, confining the CIRP to the project Raheja Shilas (Low Rise) only.”

Navin M. Raheja argued that the CIRP should have been limited to Raheja Shilas. He contended that the NCLT erred in admitting the Section 7 application against Raheja Developers Ltd. without restricting it to the project. He also noted that the allottees of Raheja Shilas had themselves requested the Authority to initiate insolvency proceedings only for this project.

The Tribunal relied on its earlier rulings in Gagan Tandon & Ors. vs. IL&FS Financial Services Ltd. & Ors., Company Appeal (AT) (Insolvency) No. 500 of 2025, and Flat Buyers Association Winter Hills, Company Appeal (AT) (Ins.) No. 926 of 2019. In the latter case, the Bench noted:

“If allottees, financial creditors, or financial institutions who are operational creditors of one project have initiated a CIRP against the Corporate Debtor, it should be confined to the particular project, and it cannot affect any other project.”

Applying these precedents, the NCLAT modified the NCLT order to confine the CIRP strictly to Raheja Shilas (Low Rise). It clarified that this modification does not bar the allottees or financial creditors from initiating separate Section 7 or Section 9 proceedings regarding other projects of Raheja Developers Ltd.

The Tribunal also granted the parties liberty to file for withdrawal of the CIRP under Section 12A if they reach a full settlement in the future. Furter, it noted that some homebuyers (Respondent Nos. 1 to 43) had objected to a total closure of the CIRP due to unresolved issues, including unpaid electricity dues and delay compensation.

Accordingly, the Tribunal disposed of the appeal.