Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 15 October 2026

Case Overview

  • Parties: Appellants – Deepak Raheja and another; Respondents – Omkara Assets Reconstruction Private Ltd and another. The appeals relate to two corporate debtors: GSTAAD Hotels Pvt. Ltd (operates JW Marriott Hotel, Bangalore) and Neo Capricorn Plaza Pvt. Ltd (operates Crowne Plaza Hotel, Pune).
  • Background: On 26 December 2017 Piramal Finance Ltd (later Piramal Capital and Housing Finance Ltd – PCHFL) extended a term loan of Rs 450 crore and a Rolling Credit Facility (RCF) of Rs 50 crore to GSTAAD, and a term loan of Rs 100 crore to Neo. Both borrowers also obtained two facilities under the Emergency Credit Line Guarantee Scheme (ECLGS): Rs 98 crore (sanctioned 29 Dec 2020) and Rs 65 crore (sanctioned 11 Mar 2022) for GSTAAD; Rs 19.5 crore (sanctioned 30 Dec 2020) for Neo.
  • Cash Management Agreement (CMA): Executed Jan 2018 between the lender, the corporate debtor and Marriott Hotels India Pvt. Ltd. Gross hotel revenue was to be deposited into a Revenue Account, with 66 % transferred daily to an Expense Account and 34 % to a Retention Account for debt servicing.
  • Debt Service Reserve Account (DSRA): Clause 9 required Rs 8 crore DSRA for GSTAAD and Rs 2 crore for Neo. As of 15 Nov 2022, Rs 3 crore of the GSTAAD DSRA remained undisbursed.
  • Assignment: On 27 Dec 2022 PCHFL and Piramal Fininvest Pvt. Ltd (later Piramal Enterprises Ltd) exercised unilateral assignment clauses (27.1 & 27.2) and assigned the term loan, RCF, and both ECLGS facilities to Omkara Asset Reconstruction Pvt. Ltd.
  • Default Filings: Four Form‑D filings recording defaults for the term loan, RCF, ECLGS‑1 and ECLGS‑2 were made on 9 Feb 2023 with the National E‑Governance Services Ltd (NeSL), the Information Utility.
  • Recall Notice: On 15 Feb 2023 Omkara recalled the entire outstanding, demanding Rs 666,53,26,968 from GSTAAD and Rs 119,99,23,320 from Neo within three days.
  • Insolvency Proceedings: Omkara filed CP (IB) No. 291 2023 (GSTAAD) and CP (IB) No. 290 2023 (Neo) under Section 7 of the IBC, stating default date 15 Nov 2022 and total default claim Rs 665,74,77,237 (as of 27 Feb 2023). The National Company Law Tribunal (NCLT), Mumbai Bench, admitted both petitions on 9 Jan 2024, declared a moratorium and appointed an Interim Resolution Professional.
  • High Court Challenge: GSTAAD filed Writ Petition No. 6037 2023 in Karnataka High Court contesting the assignment as contrary to the Securitisation and Reconstruction of Financial Assets Act, 2002. The Single Judge dismissed the petition on 28 Feb 2024; the Division Bench dismissed the appeal on 19 May 2024; a Special Leave Petition was dismissed by this Court on 25 Aug 2025.
  • Appellate Tribunal Orders: The NCLAT, in a common judgment dated 8 Jan 2025, set aside the NCLT admission orders, remanded the matters for fresh consideration, and directed that the Committee of Creditors not be constituted pending the remand.
  • Subsequent Proceedings: Both parties filed additional affidavits and replies. The Adjudicating Authority, after fresh hearing, again admitted the petitions on 8 July 2025, finding a financial debt exceeding the Section 4 threshold and that the debt was in default.
  • Appellate Tribunal Confirmation: The Tribunal affirmed the Adjudicating Authority’s findings on 19 Aug 2025.
  • Key Findings on CMA & DSRA: The Tribunal held that the CMA merely channels a percentage of revenue for debt servicing and does not discharge the underlying repayment obligation. An alleged excess withdrawal of Rs 10,35,88,444 from the Retention Account pertained to April‑May 2023, not to the default period (Nov 2022‑Feb 2023). The DSRA could not be used to extinguish the default; even assuming full utilisation, a residual default of Rs 1,76,29,350 (interest) and Rs 4,08,33,334 (principal) remained.
  • Default Quantification: The Adjudicating Authority computed default as of 15 Nov 2022:
  • Interest outstanding under ECLGS‑I: Rs 1,38,64,767
  • Interest outstanding under ECLGS‑II: Rs 1,14,59,589
  • Two unpaid instalments under ECLGS‑I: Rs 4,08,33,334
  • Total ECLGS default: Rs 5,46,98,101
  • Aggregate interest (all facilities): Rs 9,87,30,348 plus default interest Rs 2,90,87,114
  • Overall default for GSTAAD: Rs 17,16,29,518
  • Minimum default for Neo: Rs 2,64,99,473
  • Legal Questions Presented to the Supreme Court:

1. What evidentiary threshold must the Adjudicating Authority satisfy to ascertain a “default” under Sections 3(12) and 7 of the IBC?

2. What documentary material may the Authority rely upon to record satisfaction of default?

  • Supreme Court Reasoning:
  • The Court limited its jurisdiction to questions of law under Section 62(1) and emphasized that findings of fact by the NCLT and NCLAT are not to be disturbed unless perverse.
  • It affirmed that Omkara is a financial creditor under Section 5(7) – the assignment is final and barred from re‑litigation by issue estoppel.
  • The evidentiary threshold for default is a summary, prima facie determination based on the pre‑ponderance of probabilities from the documentary record; a full forensic reconciliation is not required.
  • The primary tier of evidence is a record of default issued by an Information Utility (Form‑D filings with NeSL). Such a record carries a presumption of high evidentiary value and is sufficient unless displaced by clear, cogent, credible material.
  • The secondary tier consists of other documents enumerated in Part V of Form 1 of the IBC (Application to Adjudicating Authority) Rules, 2016 – loan agreements, statements of account, balance confirmations, acknowledgements of liability, one‑time settlement proposals, and contemporaneous correspondence. Collectively, they may establish default but none is individually as decisive as the Information Utility record.
  • Profitability or EBITDA is irrelevant to the existence of default; the relevant metric is the ability to service debt (Debt Service Coverage Ratio). GSTAAD’s DSCR of 0.12 for FY 2022‑23 demonstrated inability to meet obligations despite positive EBITDA.
  • The Court noted the 2026 amendment to Section 7(5) which makes admission mandatory when a record of default is furnished, reinforcing the hierarchy already articulated.
  • Final Outcome:
  • Both civil appeals (Civil Appeal No. 12195 2025 and the connected appeal) are dismissed.
  • The orders dated 8 July 2025 of the NCLT, Mumbai Bench, in CP (IB) 291 2023 and CP (IB) 290 2023, as affirmed by the NCLAT judgment of 19 Aug 2025, are upheld.
  • The Corporate Insolvency Resolution Process for GSTAAD Hotels Pvt. Ltd and Neo Capricorn Plaza Pvt. Ltd shall continue in accordance with law.
  • No order as to costs (the earlier proposal for exemplary costs was withdrawn due to the death of the first appellant).

Topics: Insolvency Law, Default Determination, Information Utility