Complex Disputed Commercial Arrangements Cannot Be Decided In Summary Insolvency Proceedings: NCLT Jaipur

The Jaipur Bench of the National Company Law Tribunal (NCLT) has refused to admit Empire Housing Projects Pvt. Ltd.'s insolvency plea against Ninaniya Estates Ltd.

It held that the dispute arose from a complex and seriously contested commercial arrangement linked to a real estate transaction, which could not be resolved in summary insolvency proceedings.

The matter was heard by a bench of Judicial Member Reeta Kohli and Technical Member Kavita Bhatnagar.

“In the considered opinion of this Tribunal, such issues cannot appropriately be adjudicated within the limited summary jurisdiction contemplated under Section 7 of the Code. The Code is intended for resolution of genuine insolvency and not for adjudication of complex and seriously disputed commercial arrangements requiring detailed examination of evidence. While the Adjudicating Authority is not expected to conduct a full-fledged civil trial, it equally cannot ignore substantial and bona fide disputes concerning the basic nature of the transaction itself.”

Empire Housing sought initiation of the corporate insolvency resolution process against Ninaniya Estates over an alleged default of Rs 36.29 crore. It claimed that funds advanced in 2019 under an initially contemplated share subscription arrangement were later treated as an inter-corporate deposit transaction through successive agreements.

It relied on ICD agreements, balance confirmations, ledger entries, NeSL records, Form-D issued by NeSL, and dishonoured cheques to establish financial debt and default.

Ninaniya Estates opposed the plea. It contended that the transaction was not a simple lending arrangement but was intrinsically linked to allotment of commercial units in its “Prism Portico” project in Gurugram.

It argued that Agreements to Sell had been executed between the parties. It also said Empire Housing had initiated proceedings before Haryana RERA as an allottee in relation to the same transaction.

The company further contended that the ICD agreements merely operated as collateral or security documentation. It said these did not alter the essential nature of the underlying transaction.

It also disputed the genuineness of the final ICD/Addendum dated February 24, 2025, alleging forgery.

The tribunal observed that the material on record disclosed “overlapping and parallel commercial arrangements” involving Agreements to Sell, assured return features, ICD agreements, balance confirmations, repayment acknowledgments, personal guarantees and issuance of cheques.

It held that these disputed issues required a detailed examination of evidence and could not be conclusively determined in summary insolvency proceedings.

The petition was dismissed. The tribunal granted Empire Housing liberty to pursue other remedies available in law.

For Financial Creditor: Advocate Amar Vivek; Advocate Aditya Gauri; Advocate Damini Srestha; Advocate Anant Jain; Advocate Aryan Chhabra.

For Corporate Debtor: Advocate Sonal Anand; Advocate Surbhi Singh.