[Cites 2, Cited by 0]
Karnataka High Court
Mr. Murali Mohan Sb vs India Housing Fund on 6 March, 2026
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WP No. 4520 of 2026
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF MARCH, 2026
BEFORE
THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO. 4520 OF 2026 (GM-RES)
BETWEEN:
1. MR. MURALI MOHAN SB
S/O S.M BYYANNA
AGED ABOUT 38 YEARS
R/AT NO. 47/1, 4TH CROSS
L.G FOOD ROAD, THAVAREKERE
BENGALURU 560 029
EMAIL- [email protected]
2. MR. RAVI KUMAR .C
S/O MR. CHANDRAPPA .C
AGED ABOUT 37 YEARS
R/AT NO.270, 6TH A CROSS
JAKKUR LAYOUT, BENGALURU - 560 064
EMAIL- [email protected]
3. MR. RAJU .N
Digitally signed by
NAGARAJA B M S/O MR. NAGRAJ
Location: HIGH
COURT OF
AGED ABOUT 35 YEARS
KARNATAKA R/AT NO.29, 9TH MAIN
NEAR CHOWDESHWARI BUS STOP
AKKIYAPPA GARDEN, MOHANKUMARNAGAR
YESHWANTHPUR, BENGALURU-560 022.
EMAIL- [email protected]
4. MR. SHIVRAJ C
S/O MR. CHANDRASHEKHAR .P
AGED ABOUT 33 YEARS
R/AT NO.14/1, 1ST CROSS
PAPIAH LAYOUT
V. NAGENAHALLI
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BENGALURU-560 032.
EMAIL- [email protected]
5. MR. R. ARUN
S/O MR. G RAVI
AGED ABOUT 34 YEARS
R/AT GUDDADAHALLI MAIN ROAD
2ND CROSS, ANANDGIRI EXTENSION
HEBBAL, BENGALURU - 560 032
[email protected]
6. MR. M. DIWAKAR
S/O R. MURUGESH
AGED ABOUT 28 YEARS
R/AT NO. 279, 3RD CROSS
3RD MAIN ROAD, AKBARI MASJID ROAD
CHAMUNDINAGAR MAIN ROAD
BENGALURU - 560 032
EMAIL- [email protected]
7. MR. PURUSHOTHAM S.B.
S/O BYANNA
AGED ABOUT 32 YEARS
R/AT NO. 47/1, 4TH CROSS
L.G FOOD ROAD, THAVAREKERE
BENGALURU - 560 029
EMAIL-
[email protected]
8. MR. FAHAD .R.M
S/O MUSTHAFA
AGED ABOUT 34 YEARS
R/AT. RAYAMMARAKKARVEETIL
ALOOR, ALOOR MATOM
THRISSUR- 680 602
EMAIL- [email protected]
9. MR. SHAMSHEER ANJAM PILAKKEEL
S/O UMMAR KP
AGED ABOUT 48 YEARS
R/AT AL HIMMATH KANNUR
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MOWANCHERI, KERALA-670 613
EMAIL- [email protected]
10. MR. AJAY KUMAR
S/O MOHAN RATHOD
AGED 31 YEARS
R/AT NO. 11-86
NEAR RAILWAY STATION
BANJARA NAGAR, CHITTAPUR
SHAHABAD, KALBURGO - 585 228
EMAIL- [email protected]
...PETITIONERS
(BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SRI. SWAROOP .S, ADVOCATE)
AND:
1. INDIA HOUSING FUND
A CATEGORY II ALTERNATIVE
INVESTMENT FUND
INCORPORATED UNDER
THE PROVISIONS OF SECURITIES
AND EXCHANGE BOARD
OF INDIA (ALTERNATIVE INVESTMENT FUND)
REGULATIONS 2012
HAVING ITS REGISTERED OFFICE AT
360 ONE CENTRE, KAMALA MILLS COMPOUND
SENAPATI BAPAT MARG, LOWER PAREL
MUMBAI - 400 013.
REPRESENTED HEREIN BY
INVESTMENT MANAGER
360 ONE ALTERNATES ASSET
MANAGEMENT LTD.
EMAIL- [email protected]
2. INDIA HOUSING FUND SERIUS-2
A CATEGORY II ALTERNATIVE
INVESTMENT FUND, INCORPORATED
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WP No. 4520 of 2026
HC-KAR
UNDER THE PROVISIONS OF
SECURITIES AND EXCHANGE
BOARD OF INDIA (ALTERNATIVE
INVESTMENT FUND) REGULATIONS 2012
HAVING ITS REGISTERED OFFICE AT
360 ONE CENTRE, KAMALA MILLS COMPOUND
SENAPATI BAPAT MARG, LOWER PAREL
MUMBAI - 400 013.
REPRESENTED HEREIN BY
INVESTMENT MANAGER
360 ONE ALTERNATES
ASSET MANAGEMENT LTD.
EMAIL- [email protected]
3. GULAM MUSTAFA ENTERPRISES PVT. LTD.
A COMPANY INCORPORATED UNDER
THE PROVISION OF
THE COMPANIES ACT, 2013
HAVING REGISTERED OFFICE AT
NO.6, GM PEARL, I STAGE
I PHASE, BTM LAYOUT
BENGALURU - 560 068.
REPRESENTED BY ITS
DIRECTOR AND AUTHORIZED SIGNATORY
SRI. GULAM MUSTAFA
EMAIL- [email protected]
...RESPONDENTS
(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SRI. PINAZ MEHTA, ADVOCATE FOR C/RESPONDENT)
THIS WP IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA, PRAYING TO SET ASIDE THE ORDER
DATED 02.02.2026 PASSED BY THE NCLT IN CP (IB) NO. 90 OF
2026 AT ANNEXURE P AND ETC.
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WP No. 4520 of 2026
HC-KAR
THIS PETITION, COMING ON FOR DICTATING ORDERS,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
ORAL ORDER
The petitioners have approached this Court calling in
question the order dated 02.02.2026 passed by the
National Company Law Tribunal (for short, "NCLT")
produced at Annexure-P and have also sought a direction
to the NCLT to consider the intervening application filed by
the petitioners.
2. The brief facts leading to the present petition
indicate that respondent No.3 is a builder who undertook a
residential project by name "GM Global Techies Town".
The project was approved by the Real Estate Regulatory
Authority and the developer had undertaken to deliver the
apartments within the timeline stipulated under the
agreements entered into with the purchasers. The
petitioners claim that they had entered into agreements
for sale with respondent No.3 after paying substantial
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amounts as advance consideration. According to the
petitioners, the project was to be completed within five
years from the date of execution of the agreements, with
a further grace period of six months.
3. It is the grievance of the petitioners that the
construction of the project was not completed within the
stipulated time and the work came to a halt for a
considerable period. On making enquiries regarding the
status of the project, the petitioners claim to have learnt
that several proceedings were pending before the Real
Estate Regulatory Authority wherein respondent No.3 was
not effectively represented. The petitioners further state
that several petitions were pending before the NCLT
against respondent No.3 and that respondent No.3 had
outstanding debts exceeding 600 crores. It is also
contended that the project property forming the subject
matter of the agreements entered into with the petitioners
had been mortgaged in favour of respondent Nos.1 and 2.
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4. The petitioners contend that if the applications
filed under Section 7 of the Insolvency and Bankruptcy
Code, 2016 (for short 'IBC') were to be admitted, the
same would directly affect the interests of the petitioners
who are homebuyers in the project. In that view of the
matter, the petitioners filed an intervention application
before the NCLT seeking a limited relief, namely, that the
project property relating to the petitioners' flats be
excluded from the Corporate Insolvency Resolution
Process.
5. The petitioners further contend that on
02.02.2026, when the matter was listed before the NCLT,
the petitioners and respondent Nos.1 and 2 were ready to
advance arguments. However, learned counsel appearing
for respondent No.3 sought a pass over on the ground that
a Senior Counsel was to appear in the matter. Since the
Senior Counsel did not arrive in time, the NCLT proceeded
to pass the impugned order.
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6. Learned Senior Counsel Sri. Dhyan Chinnappa,
appearing on behalf of respondent Nos.1 and 2, the
financial creditors, would contend that the petition itself is
misconceived. Placing reliance on the judgment of the
Hon'ble Supreme Court in Elegna Co-operative Housing
and Commercial Society Ltd. vs. Edelweiss Asset
Reconstruction Company Ltd. & Another1, he would
submit that proceedings under Section 7 of the IBC at the
pre-admission stage are proceedings in personam and that
neither the adjudicating authority nor the appellate
authority is required to hear other creditors or unrelated
third parties. It is therefore contended that the petitioners,
who claim to be homebuyers, have no locus to intervene
at the pre-admission stage. Learned Senior Counsel would
further contend that the petitioners have not specifically
pleaded any case of fraud and therefore cannot seek to
circumvent the settled legal position governing
proceedings under Section 7 of the IBC.
2026 INSC 58
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7. Per contra, learned Senior Counsel Sri. Uday
Holla appearing for the petitioners would contend that the
present case involves allegations of fraud and collusion
between the developer and the financial creditors. He
would therefore submit that the petitioners, being
homebuyers whose interests would be directly affected,
ought to be permitted to be heard even at the pre-
admission stage of the proceedings before the NCLT.
8. This Court has carefully considered the
submissions made by the learned Senior Counsel
appearing on both sides and have also perused the
material placed on record.
9. The principal issue that arises for consideration
is whether the petitioners, who claim to be homebuyers in
the project undertaken by respondent No.3, have a right
of audience before the NCLT at the pre-admission stage of
proceedings under Section 7 of the IBC.
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10. The said issue is no longer res integra. The
Hon'ble Supreme Court in Elegna Co-operative Housing
and Commercial Society Ltd. (supra) has clearly held
that proceedings under Section 7 of the IBC at the stage
prior to admission are in personam, and that the
adjudicating authority is only required to examine whether
there exists a financial debt and whether a default has
occurred. The Hon'ble Supreme Court has categorically
held that at such stage neither other creditors nor
unrelated third parties are required to be heard. The
relevant principle laid down is that when proceedings are
in personam, no right of audience inheres in persons who
are strangers to the debt and default forming the basis of
the application.
11. In the present case, the applications before the
NCLT are filed by the financial creditors under Section 7 of
the IBC seeking initiation of Corporate Insolvency
Resolution Process against respondent No.3. The
petitioners admittedly are not the applicants in those
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proceedings. The debt and default forming the basis of the
Section 7 petitions arise out of financial transactions
between the financial creditors and the corporate debtor.
The petitioners, who claim to be purchasers of apartments
in the project, cannot be treated as necessary parties to
such proceedings at the pre-admission stage.
12. Much emphasis was placed by the learned
Senior Counsel for the petitioners on the contention that
fraud and collusion are alleged and therefore the embargo
relating to participation at the pre-admission stage should
not apply.
13. This Court has carefully examined the
averments made in the affidavit filed in support of the
present writ petition. On a close reading of the pleadings,
it becomes evident that no specific plea of fraud has been
articulated with necessary particulars. The pleadings only
contain general allegations and apprehensions regarding
the conduct of the developer and the financial creditors.
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Such vague allegations cannot be treated as a specific plea
of fraud so as to dilute the settled legal position governing
proceedings under Section 7 of the IBC.
14. In the absence of a specific and substantiated
plea of fraud, the petitioners cannot seek to carve out an
exception to the principle laid down by the Hon'ble
Supreme Court that at the pre-admission stage of a
Section 7 of the IBC proceeding, third parties or other
creditors have no independent right of audience before the
adjudicating authority.
15. It is also relevant to note that the IBC provides
a comprehensive statutory framework governing the rights
of various stakeholders once the insolvency process is
admitted. At that stage, the Code itself provides
mechanisms through which the claims of different classes
of creditors, including homebuyers, may be considered in
accordance with law. However, permitting intervention by
third parties at the threshold stage would run contrary to
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the scheme of the IBC and the law laid down by the
Hon'ble Supreme Court.
16. In view of the authoritative pronouncement of
the Hon'ble Supreme Court in Elegna Co-operative
Housing and Commercial Society Ltd. (supra), this
Court is of the considered opinion that the petitioners,
being homebuyers, cannot be treated as necessary parties
at the pre-admission stage of proceedings under Section 7
of the IBC, and therefore no enforceable right of audience
accrues to them before the NCLT at this stage.
17. Consequently, the challenge to the impugned
order dated 02.02.2026 passed by the NCLT does not
merit interference by this Court.
18. Accordingly, the writ petition stands
dismissed.
SD/-
(SACHIN SHANKAR MAGADUM)
JUDGE
CA / List No.: 3 Sl No.: 2
