Authority: National Company Law Tribunal, Mumbai Bench-VI (Court VI)

Order Date: 19 June 2026

Case Overview

The Financial Creditor (FC), Union Bank of India, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against the Corporate Debtor (CD), Rashmi Realty Builders Private Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The application was affirmed by Mrs. Archana J.S., Chief Manager of Union Bank. The amount claimed to be in default was ₹60,97,67,085 (Rupees Sixty Crore Ninety-Seven Lakh Sixty-Seven Thousand Eighty-Five Only) as of 31 December 2025, with the date of default stated as 31 December 2016.

The FC had sanctioned a Working Capital Term Loan (WCTL) facility of ₹32 Crores to the CD on 29 January 2014 for financing its project "Rashmi Starcity Phase II and III" at Naigaon (East), District Palghar. The loan was to be repaid in 24 monthly instalments of ₹1.33 Crores each after a 24-month moratorium. The CD executed various loan and security documents, including a General Term Loan Agreement, Composite Hypothecation Deed, and an Indenture of Mortgage dated 04 March 2014. Directors Mr. Yogesh Bosmiya and Mr. Hemendra Bosmiya executed personal guarantees and mortgaged immovable properties. The account was classified as a Non-Performing Asset (NPA) on 31 December 2016. A Recall Notice was issued on 18 January 2017, and a Demand Notice under Section 13(2) of the SARFAESI Act was issued on 05 April 2017. The CD made sporadic part-payments between 2017 and 2022, the last being on 23 June 2022, and offered a One-Time Settlement (OTS) of ₹27.50 Crores on 17 February 2025, which the FC rejected.

The CD raised objections on the grounds of limitation, contending the application was time-barred as it was filed in 2025 for a default dated 2016. The CD also challenged the admissibility of financial records, argued that the insolvency should be project-specific, and filed an Interlocutory Application (IA No. 514/MB/2026) under Section 65 of the IBC, alleging the petition was filed with malicious intent.

The FC contended that the debt was acknowledged in the CD's balance sheet for the financial year ending 31 March 2019 (signed on 25 June 2019), which reflected the borrowings. This acknowledgment, along with the exclusion of the limitation period from 15 March 2020 to 28 February 2022 as per the Supreme Court's order in In Re: Cognizance for Extension of Limitation, and subsequent written communication from the CD dated 13 September 2022 and the OTS proposal, extended the limitation period, making the application within time.

Final Outcome

The Tribunal admitted the Section 7 application but confined the CIRP only to the specific project "Rashmi Starcity Phase II & III" situated at Naigaon (East), District Palghar, citing the project-specific nature of the financing and security. This decision was based on precedents set by the Supreme Court in Mansi Brar Fernandes vs. Shubha Sharma and the NCLAT in Gagan Tandon vs. IL&FS Financial Services Ltd., which advocate for a project-wise insolvency approach in real estate to protect unrelated projects and homebuyers.

The CD's IA under Section 65 alleging malicious intent was rejected, with the Tribunal finding no evidence of fraud or mala fides. The objections on limitation and evidentiary value of financial records were also rejected. The Tribunal held that the balance sheet entry constituted a valid acknowledgment under Section 18 of the Limitation Act, 1963.

Mr. Purusottam Behera (Registration No. IBBI/IPA-002/IP-N00940/2019-2020/12993) was appointed as the Interim Resolution Professional (IRP) for the project. A moratorium under Section 14 of the IBC was declared, effective immediately, prohibiting any legal actions, transfers of assets, or recovery efforts against the specified project. The FC was directed to pay an advance of ₹3,00,000 to the IRP to meet the initial costs of the CIRP. The IRP was directed to make a public announcement and take charge of the project.

Topics: Insolvency, Limitation Law, Real Estate Projects