NCLAT Confines CIRP Against Raheja Developers to Krishna Housing Scheme Project

April 10, 2026 : The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that the Corporate Insolvency Resolution Process (CIRP) initiated against Raheja Developers Ltd. must remain confined to the specific real estate project in respect of which the default has arisen, namely the “Krishna Housing Scheme” project in Gurugram.

The Appellate Tribunal, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), was adjudicating an appeal filed by Navin M. Raheja, suspended director of the corporate debtor, challenging the order dated 21 August 2025 passed by the NCLT, New Delhi Bench admitting a Section 7 application filed by 130 homebuyers of the project.

The Tribunal noted that the Section 7 application had been filed exclusively by homebuyers who were allottees in the Krishna Housing Scheme, an affordable group housing project situated in Sector 14, Sohna, Gurugram. The project comprised 1,644 residential units along with commercial components and was required to be completed by 10 June 2019. However, due to failure in handing over possession within the stipulated timeline, the homebuyers alleged default and initiated insolvency proceedings.

Upholding the admission of CIRP by the NCLT on the ground that debt and default were established, the Appellate Tribunal proceeded to examine the scope of such insolvency proceedings. The central issue before the Tribunal was whether the CIRP should extend to the entire corporate debtor, which is engaged in multiple real estate projects, or be restricted to the project in relation to which the default occurred.

Answering this in favour of a project-specific approach, the Tribunal relied on its earlier precedents as well as principles governing real estate insolvency. It held that where financial creditors in a class pertain to a particular project, the CIRP ought to be confined to that project alone. The Tribunal emphasized that insolvency proceedings in real estate matters are intended to facilitate completion and resolution of the concerned project rather than operate as a blanket proceeding against all projects of the developer.

The Bench observed that the claims of creditors and allottees of other projects cannot be subsumed within the present CIRP and must be pursued independently in accordance with law. It further clarified that different projects of a real estate developer may involve distinct stakeholders, approvals, and financial structures, thereby justifying project-wise segregation in insolvency proceedings.

During the proceedings, while the appellant expressed willingness to refund the amounts paid by homebuyers with interest and had made certain part payments, financial creditors such as Punjab National Bank and Edelweiss Asset Reconstruction Company opposed any settlement outside the statutory framework. They contended that once CIRP is admitted, withdrawal must strictly comply with Section 12A of the Insolvency and Bankruptcy Code.

Taking note of the competing submissions, the Tribunal reiterated that insolvency proceedings cannot be converted into recovery mechanisms and must align with the objective of resolution. It also granted liberty to creditors and homebuyers of other projects to initiate or continue appropriate legal remedies independently.

Accordingly, the NCLAT directed that the CIRP initiated pursuant to the NCLT’s order shall remain confined to the Krishna Housing Scheme project. The Interim Resolution Professional was directed to invite and collate claims limited to the said project and to provide adequate opportunity for submission of claims.

Case Title: Navin M. Raheja v. Shravan Minocha & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 1276 of 2025