SATINDER SINGH BHASIN VS COL. GAUTAM MULLICK & ORS : CASE SUMMARY

The Supreme Court in Satinder Singh Bhasin Vs. Col. Gautam Mullick & Ors (Civil Appeal No 13628 of 2025 ) held that in cases of  intrinsically linked companies it would be in their interest to have a joint insolvency process so as to maximize asset realization.

FACTS OF THE CASE

Application was filed by some allottees to initiate CIRP against two interlinked companies – Grand Venezia Ltd. and Bhasin Ltd. which was were admitted by NCLT vide order dated 04.12.2023.  The admission was challenged before NCLAT by aggrieved erstwhile directors of both companies on several grounds including the ground that initiation of insolvency process against two separate corporate entities by way of one application was not maintainable.  The appeal was dismissed by the NCLAT.  Appeals were filed by aggrieved parties before the Hon’ble Supreme Court.

FINDINGS OF THE SUPREME COURT

The one of the questions raised before raised before the Supreme Court was whether the threshold limit of 100 allottees prescribed by the second proviso to Section 7(1) of the Code stood fulfilled in the case on hand. It was contended that, out of the 103 allottees who had applied to the NCLT, 28 allottees had taken possession while 13 allottees were refunded their monies by the time of passing of the admission order. It was further claimed that 7 allottees signed settlement deeds but did not take possession due to registration formalities. Therefore, according to the appellants, the petitioning allottees with unsettled claims were only 55 in number. The Supreme Court observed that in any event, the day of reckoning stands settled by this Court in Manish Kumar Vs Union of India (2021) 5 SCC 1, wherein it was held that the crucial date for ascertaining whether the threshold is adequately met is the date of filing of the petition and not the date of the admission or hearing thereof.

Another contention was submitted that the cause-title with regard to the names of the allottees who appeared as petitioners therein and the refiled petition did not reflect the same names as were there in the petition initially filed on 07.07.2021. The Supreme Court observed that under rule Rule 28(2) makes it clear that if, upon scrutiny, the appeal or petition or application or document is found to be defective, the same should be returned to the party for compliance. However, Rule 28(3) goes further and states that a party may be allowed to not only rectify but also amend such returned appeal or petition or application or document. Rule 28(4) manifests that it is only after the refiling, upon curing of the defects, that the Registrar would register the pleading or document. Rule 29 of the NCLT Rules is titled ‘Registration of proceedings admitted’ and states that on admission of an appeal or petition or caveat or application, the same shall be numbered and registered in the appropriate register maintained in that behalf and the number shall be entered therein. the mere filing of the company petition on 07.07.2021 did not result in the same being ‘registered’ on the file of the NCLT and it was only after rectification/amendment of the petition and upon its refiling, with the defects therein cured, that the same would have been registered.  The Supreme Court noted that in Surendra Trading Company vs. Juggilal Kamlapat Jute Mills Company Limited and others, (2017) 16 SCC 143  it was held that till the objections in an application filed under Sections 7, 9 or 10 of the Code are removed, it is not to be treated as an application validly filed, as it is only after the application is complete in every respect that it is required to be entertained.

On the aspect of  application being filed for initiation of CIRP in respect of two companies, the Supreme Court noted that the letter of allotment, in relation to the leased land, was issued by the UPSIDA on 05.08.2006 in favour of Bhasin Ltd alone. The project was, therefore, to be undertaken essentially by Bhasin Ltd. It was only thereafter, i.e., on 14.12.2009, that Bhasin Ltd. entered into an agreement with Grand Venezia Ltd., granting it marketing rights in relation to the sale of units in the project. It is a matter of record that the two companies had common directors, including Satinder Singh Bhasin, for some length of time. Further, demand notices and possession letters were issued by Bhasin Ltd. to the allottees of Grand Venezia Ltd. and the correspondence/communications with the allottees were by both the companies interchangeably. Payment receipts also manifested the same. These documents formed part of the company petition. The argument that these were two completely independent and separate companies, therefore, falls to the ground. In any event, as they were jointly answerable to the allottees, the filing of a single company petition against them was justified.

The Supreme Court also negated the contention of appellants that the construction was completed in all respects and possession was delivered to some of the petitioning allottees is found to be without merit and factual foundation.

The Supreme Court affirmed the decision of the NCLT and NCLAT.

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