Deepak Raheja & Anr. v. Omkara Assets Reconstruction Pvt. Ltd. & Anr.

What happened

By a Loan Agreement of 26 December 2017 Piramal gave a Rs.600 crores facility to GSTAAD Hotels Pvt. Ltd. (Bangalore) and Neo Capricorn Plaza Pvt. Ltd. (Pune), with a Cash Management Agreement under which 34 per cent of revenue went to a Retention Account for debt service, a debt service reserve of Rs.8 crores and two ECLGS facilities of Rs.98 crores and Rs.65 crores. On 27 December 2022 the loans were assigned to Omkara Assets Reconstruction, four Form-D default filings were registered with NeSL on 9 February 2023, and on 15 February 2023 the loans were recalled for Rs.666,53,26,968/- against GSTAAD and Rs.119,99,23,320/- against Neo. Omkara filed section 7 petitions on 9 March 2023 stating default on 15 November 2022, which the NCLT admitted on 9 January 2024, the NCLAT remanded on 8 January 2025, and the NCLT again admitted on 8 July 2025, affirmed by the NCLAT on 19 August 2025. The debtor's own writ petition against the assignment was dismissed by the Karnataka High Court, the writ appeal dismissed on 19 May 2024 and the SLP on 25 August 2025. The debtors said the Cash Management Agreement and the reserve showed no default, that the ECLGS dues were not payable, that the NCLAT's remand findings were final, that they were profitable with positive EBITDA, and relied on Vidarbha Industries Power v. Axis Bank.

Questions before the court

• What must a financial creditor establish and by what evidence at the admission stage under section 7 of the Insolvency and Bankruptcy Code, and does disputed quantum or profitability stop admission?

Why the court ruled this way

Under section 62(1) the appeal is on a question of law only, and concurrent findings by the specialised tribunals on the same accounts are not disturbed unless perverse or based on no evidence (paragraphs 27 to 29). Section 5(7) includes an assignee in the definition of a financial creditor and the validity of the assignment was settled between the same parties, so issue estoppel applies; the Adjudicating Authority cannot sit in appeal over the High Court (paragraphs 30 to 32). Section 3(12) defines default as non-payment of the whole or any part or instalment of an amount of debt due and payable, so a partial shortfall suffices, and the fourteen-day period in section 7(4) shows the enquiry is a summary determination, with quantification left to the Interim Resolution Professional (paragraphs 40 to 47). Sections 7(3)(a) and 7(4) put the information utility record first, and authentication under the Information Utilities Regulations works as a deemed admission and estoppel under section 31 and section 115 of the Evidence Act, so only clear, cogent, credible and compelling material rebuts it; other documents under rule 4 of the Application Rules are weighed collectively (paragraphs 48 to 58). Here the NeSL records confirmed that default was registered, the figure of Rs.17,16,29,518/- as on 15 November 2022 for GSTAAD and Rs.2,64,99,473/- for Neo came from the accounts the debtor itself produced, and the debtors' letter of 23 December 2022 and the admission in the High Court proceedings were consistent with default (paragraphs 59 to 64). EBITDA is earned before interest and says nothing about capacity to pay, and the debtor's debt service coverage ratio was 0.12 for 2022-23 (paragraphs 65 and 66). The Court noted that the Insolvency and Bankruptcy Code (Amendment) Act, 2026 made admission mandatory under section 7(5)(a), added Explanation I and Explanation II, and described them as clarificatory (paragraphs 67 to 69).

Controlling point

A default above the threshold was established, the assignee was a financial creditor, and admission was right.

Order and next steps

The appeals were dismissed with no order as to costs and the CIRPs proceed; the Court also recorded that a compilation of judgments filed for the appellants contained AI-generated non-existent judgments, that exemplary costs were proposed but, on the death of the first appellant, deleted, and that the appeals did not abate.

Practical implications

A financial creditor should file the authenticated information utility record of default with the section 7 application; a corporate debtor resisting admission must produce clear and compelling material and cannot rely on reconciliation disputes, a pending cure by appropriation or profitability.

Limits of this ruling

• The Court relied on the facts of these two debtors and did not decide the exact quantum of debt, which is for the claims process; it described the 2026 amendment as clarificatory without deciding which of its other effects apply to older matters; and the observations on AI-generated material were a caution recorded in the judgment, not a directed penalty.