NCLT Orders on Earth Buildprop Insolvency Proceedings

Authority: National Company Law Tribunal, New Delhi Bench Court-IV

Order Date: 09.07.2026

Bench: Shri Manni Sankariah Shanmuga Sundaram (Member Judicial) and Shri Atul Chaturvedi (Member Technical)

Case Overview

The National Company Law Tribunal (NCLT) delivered multiple orders in the Corporate Insolvency Resolution Process (CIRP) of Earth Buildprop Private Limited, initiated on 13.05.2019. The proceedings involved several Interlocutory Applications addressing fraudulent transactions, attachment of bank accounts, resolution plan approvals, and related matters.

Key Proceedings:

1. I.A. No. 2890 of 2020 (Section 66 Application)

  • Filed by Resolution Professional Mr. Rakesh Kumar Gupta against Earth Infrastructures Ltd (EIL), Astha Fincap Pvt Ltd, Sarvram Infrastructure (India) Pvt Ltd, and directors Vikas Gupta, Rajneesh Mittal, Atul Gupta, and Mohit Kumar
  • Alleged fraudulent transactions totaling Rs 89.43 crore diverted from Corporate Debtor to related entities

2. I.A. No. 2131 of 2020 (Bank Account Defreezing)

  • RP sought directions to Economic Offences Wing to withdraw debit freeze on accounts maintained with Axis Bank
  • Accounts frozen since 14.04.2017 pursuant to EOW investigation

3. I.A. No. 3962 of 2025 (Bank Guarantee Invocation)

  • Om Drishian International Limited challenged invocation of Performance Bank Guarantee of Rs 1.85 crore
  • Guarantee invoked by RP pursuant to CoC resolution dated 28.07.2025

4. I.A. No. 4823 of 2025 (Resolution Plan Challenge)

  • BDR Builders and Developers Pvt Ltd (secured financial creditor with 16.47% voting share) challenged approval of APPL-EPIL Consortium resolution plan
  • Alleged procedural irregularities and plan feasibility issues

Fraudulent Transactions Findings (I.A. No. 2890 of 2020)

The Tribunal examined three categories of fraudulent transactions:

Transaction 1 - Earth Infrastructures Limited (Rs 26.60 crore)

  • EIL collected Rs 11.17 crore from homebuyers for "Elacasa" project before incorporation of Corporate Debtor
  • Only Rs 2.33 crore transferred to Corporate Debtor, balance Rs 8.84 crore retained
  • Corporate Debtor additionally transferred Rs 17.17 crore to EIL without commercial justification
  • EIL admitted liability of Rs 59.11 lakh during CIRP
  • Total recoverable: Rs 26,60,61,880

Transaction 2 - Astha Fincap Private Limited (Rs 27.37 crore)

  • Corporate Debtor transferred Rs 27,37,39,940 to Astha Fincap (NBFC)
  • Funds subsequently routed to Earth Galleria Private Limited and other group entities
  • No commercial rationale demonstrated for transfers

Transaction 3 - Sarvram Infrastructure India Pvt Ltd (Rs 35.45 crore)

  • Corporate Debtor paid Rs 35 crore as refundable trade deposit for development rights
  • Investigation revealed payments of Rs 70.47 crore to land-owning entities against actual consideration of Rs 37.29 crore
  • Rs 33.18 crore diverted without justification through JRM Properties Pvt Ltd

Total Fraudulent Transactions: Rs 89,43,01,820

The Tribunal found that the transactions lacked commercial justification, were not in ordinary course of business, and were designed to place assets beyond creditors' reach. Directors Vikas Gupta, Rajneesh Mittal, Atul Gupta, and Mohit Kumar were held knowingly party to carrying on business with intent to defraud creditors.

Bank Account Defreezing (I.A. No. 2131 of 2020)

The Tribunal dismissed the application seeking defreezing of accounts, holding that:

  • Debit freeze was imposed by EOW in 2017 pursuant to criminal investigations
  • NCLT cannot interfere with actions taken by investigating agencies under criminal law
  • Remedy lies before appropriate criminal court/forum
  • Section 238 IBC (overriding effect) does not displace criminal proceedings

Bank Guarantee Invocation (I.A. No. 3962 of 2025)

The Tribunal allowed the application and directed refund of Rs 1.85 crore, finding that:

  • Performance Bank Guarantee was invoked without contractual basis
  • RFRP clause 1.9.2 only provided for forfeiture of Earnest Money Deposit, not Performance Bank Guarantee
  • Alleged misrepresentation related to Format VI undertaking, while invocation clause referred to Format IIIA
  • No evidence of misrepresentation in the relevant undertaking
  • Invocation and encashment declared unsustainable

Resolution Plan Challenge (I.A. No. 4823 of 2025)

The Tribunal allowed the application and rejected the APPL-EPIL Consortium plan, directing:

  • Fresh Form G to be issued for new resolution process
  • Absolute clarity required regarding land availability for project implementation
  • Fresh valuation to be conducted

Key Findings:

1. Process Irregularities: Resolution Professional acted beyond scope of order dated 27.03.2025 by inviting addendums from other PRAs without fresh Form G

2. Plan Feasibility: Corporate Debtor lacked ownership or enforceable development rights over project land (10.218 acres in Sector 107, Gurugram)

3. Contingent Nature: Plan implementation dependent on uncertain future events (government approvals, land transfers)

4. Withdrawal Mechanism: Plan permitted Resolution Applicant to withdraw implementation, creating uncertainty

5. Consortium Changes: Material alteration in consortium composition without fresh evaluation

6. Valuation Issues: Reliance on outdated valuations from 2019 without fresh assessment

Other Applications

  • I.A. No. 3967 of 2025 and I.A. No. 4510 of 2025 filed by Om Drishian International Limited were dismissed as infructuous in light of directions for fresh process

Final Outcome

1. I.A. No. 2890 of 2020: Allowed. Directors ordered to contribute Rs 89,43,01,820 jointly and severally to Corporate Debtor's assets within 15 days

2. I.A. No. 2131 of 2020: Dismissed. Application for bank account defreezing rejected

3. I.A. No. 3962 of 2025: Allowed. RP directed to refund Rs 1,85,00,000 to Om Drishian within 15 days

4. I.A. No. 4823 of 2025: Allowed. APPL-EPIL Consortium plan rejected, fresh Form G process ordered

5. I.A. No. 3967 of 2025 and I.A. No. 4510 of 2025: Dismissed as infructuous

Topics: Insolvency Resolution, Fraudulent Transactions, Real Estate Project Completion