In a compelling reaffirmation of jurisprudential pragmatism, the Hon’ble National Company Law Tribunal, Indore Bench, in S.K. Dutta (Swapan Kumar Dutta) and Ors. vs. Global Mega Ventures Pvt. Ltd., CP (IB) No. 71/7/MP/2020, has yet again buttressed the doctrine of Reverse Corporate Insolvency Resolution Process (Reverse CIRP) in the context of real estate defaults. The judgment, authored by Hon’ble Mr. Shammi Khan (Judicial Member) and Mr. Sanjeev Kumar Sharma (Technical Member), is a testimony to the balancing act between statutory rigidity and purposive flexibility under the Insolvency and Bankruptcy Code, 2016.
The Crux of the Dispute
The Applicants—flat buyers—invoked Section 7 of the IBC alleging default in delivering possession of booked flats by Global Mega Ventures Pvt. Ltd., the Corporate Debtor. The project, though delayed, was substantially constructed, and a majority of homebuyers expressed a desire for completion of the project rather than liquidation.
The Corporate Debtor did not dispute the debt or default but sought relief under the umbrella of Reverse CIRP, praying that the project be allowed to be completed under the supervision of an Insolvency Resolution Professional (IRP), instead of proceeding towards a traditional resolution or liquidation.
Reverse CIRP: Evolution and Application
The concept of Reverse CIRP, although not statutorily defined, has now been consistently invoked by tribunals across the country post the landmark judgments in Flat Buyers Association vs. Umang Realtech Pvt. Ltd. (NCLAT) and Pioneer Urban Land and Infrastructure Ltd. v. Union of India (SC), as a means to ensure project-specific resolution.
The Hon’ble Indore Bench adopted the Reverse CIRP methodology, acknowledging that:
“In the realm of real estate insolvency, the ultimate goal under the IBC is not punitive enforcement, but completion of projects and delivery to allottees.”
The Bench rightly noted that liquidation or change of developer midstream would be counterproductive, leaving allottees in perpetual limbo and undermining the IBC’s objective of maximizing value for stakeholders.
Judicial Insight and Pragmatism
The Tribunal’s decision underscores an astute recognition of commercial realities. Notably, the Bench emphasized:
- Promoter involvement under strict IRP oversight is not antithetical to IBC if it enables completion.
- The homebuyers’ collective will is a significant factor in shaping reliefs.
- The project is the unit of insolvency, not the corporate entity per se, in real estate matters.
This shift from entity-level insolvency to project-level resolution is a doctrinal evolution that reorients the Code to its functional goals, especially in the unique ecosystem of real estate.
Implications and Way Forward
This judgment is another judicial nod to the non-adversarial and equitable treatment of homebuyers, a class now vested with financial creditor status post the 2018 amendment. By restraining liquidation and reinforcing Reverse CIRP, the Bench ensures continuity, accountability, and result-oriented governance.
The ruling also subtly nudges the legislature to consider codification of Reverse CIRP, thereby injecting predictability and preventing ad-hocism. Until then, the discretionary wisdom of tribunals remains the bedrock of this jurisprudential innovation.
Conclusion
The decision in S.K. Dutta v. Global Mega Ventures Pvt. Ltd. reiterates the constitutional ethos behind the IBC—justice, equity, and economic efficiency. It adds a meaningful chapter to the expanding body of jurisprudence that prioritizes pragmatic completion over mechanical procedure, a hallmark of purposive statutory interpretation.
As the IBC continues to mature, such judgments bridge the gap between statute and solution, firmly rooting insolvency law within the broader architecture of social justice and economic reform.
Disclaimer: This blog is a general academic commentary and is not intended to be a substitute for legal advice. Readers are advised to consult qualified professionals for guidance specific to their circumstances.