This order decides only the maintainability of the CIRP admission, not the resolution outcome or debt quantification; the AI-citation observations are a before-parting remark with no costs imposed.
- Case
- Deepak Raheja & Anr. v. Omkara Assets Reconstruction Pvt. Ltd. & Anr.
- Court
- Supreme Court of India
- Decision
- Citation
- 2026 INSC 1134
- Bench
- Dipankar Datta; Augustine George Masih
- Judgment by
- Augustine George Masih, J.
- Case numbers
- C.A. No. 12195/2025; C.A. No. ___ of 2026 (arising out of Diary No. 58001/2025)
- Outcome
- Statutory appeals under Section 62 of the IBC dismissed; NCLT Mumbai's admission orders as affirmed by the NCLAT upheld; CIRP against both corporate debtors to proceed. No order as to costs.
The decision
On 15 October 2026, a Supreme Court Bench of Justices Dipankar Datta and Augustine George Masih dismissed two statutory appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016, and upheld the initiation of corporate insolvency resolution process (CIRP) against two hotel companies — GSTAAD Hotels Pvt. Ltd., which owns and operates the JW Marriott Hotel at Bangalore, and Neo Capricorn Plaza Pvt. Ltd., which owns and operates the Crowne Plaza Hotel at Pune. The appeals, by Deepak Raheja and another, had challenged the NCLAT's common judgment of 19 August 2025 affirming the NCLT Mumbai's orders of 8 July 2025 admitting the two Section 7 petitions.
The judgment, authored by Justice Augustine George Masih, restates a foundational IBC proposition: the Code proceeds on the principle of timely intervention rather than terminal insolvency, and adopts "default" under Section 3(12) of the Code — not commercial or balance-sheet insolvency — as the jurisdictional trigger. A default above the threshold prescribed under Section 4 stood established on the record, so the CIRP will proceed in accordance with law.
The debt and the assignment
By a loan agreement dated 26 December 2017, Piramal Finance Ltd. (later Piramal Capital and Housing Finance Ltd.) extended a term-loan facility aggregating Rs 600 crores to the two companies as co-borrowers: Rs 450 crores plus a Rs 50-crore rolling credit facility to GSTAAD Hotels, and Rs 100 crores to Neo Capricorn Plaza. A cash management agreement of January 2018 between the lender, the companies and Marriott Hotels India routed the hotels' gross revenue collections through a revenue account, with 66% going daily to an expense account and 34% to a retention account for debt servicing.
The debt was later assigned to Omkara Assets Reconstruction Pvt. Ltd. under an assignment agreement dated 27 December 2022. The Court held Omkara's status as a financial creditor under Section 5(7) conclusively established: the assignment's validity had been upheld by the High Court of Karnataka and affirmed by the Supreme Court, and the challenge to it was barred by issue estoppel.
Why the appeals failed
The Court confined its Section 62 jurisdiction to questions of law: where the adjudicating authority and the appellate tribunal have concurrently returned findings of fact and law on the same material, those findings are not disturbed unless perverse, unsupported by evidence, or founded on an erroneous legal standard. On the Information Utility mechanism, the Court observed that almost ten years after the Code came into force, financial creditors routinely submit default information and corporate debtors can no longer claim unfamiliarity with authentication — adjudicating authorities must accord the Code's default records, including Explanation II to the amended Section 7(5), their due weight. With default established above the Section 4 threshold, the Court found no merit in either appeal and upheld the NCLT's admission orders as affirmed by the NCLAT.
The AI-generated citations incident
In a "before parting" passage, the Court recorded an undesirable incident from the hearing: a compilation of judgments placed on record on behalf of the appellants drew an immediate objection from the respondents, who said it was replete with AI-generated nonexistent judgments. The appellants' Advocate-on-Record, facing the Court's query, sought to shift the entire blame onto the appellants while feigning ignorance of what the compilation contained; learned senior counsel for the appellants then took the blame on himself and prayed for forgiveness on the appellants' behalf. The Court had proceeded to hear the appeal on merits while keeping the respondents' objection open, and exemplary costs had been proposed — but the Court was later informed of the death of the first appellant, so the costs order was deleted and there is "no order as to costs". The Court noted that under Order XXII Rule 6 of the Code of Civil Procedure, 1908, the appeal did not abate on the appellant's death.
What this order does not decide
The judgment decides only the maintainability of the CIRP admission; it does not decide the merits of the resolution process, the quantification of the debt, or the outcome for any class of creditor. The observations on the AI-generated compilation are a before-parting remark — no costs were ultimately imposed — and the Court expressly left the respondents' objection open while deciding the appeals on merits.
BANTHRY ANALYSISFor law students
This case is a compact revision of Section 7 jurisprudence: default, not insolvency, is the trigger — a deliberate legislative choice for timely intervention. Note the Court's treatment of Information Utilities after a decade of the Code: authentication records now carry real evidentiary weight at the admission stage, and unfamiliarity is no longer an excuse. The before-parting passage is the more memorable part for practice: verify every citation you place on record, because an AI-generated compilation does not merely embarrass counsel — it invites exemplary costs, and only an extraordinary circumstance (here, the appellant's death) saved these appellants from paying them.
READING PROMPTSQuestions for a closer reading
- Why does the Court treat 'default' under Section 3(12), rather than balance-sheet insolvency, as the jurisdictional trigger for CIRP?
- What weight does the Court say adjudicating authorities must now give to Information Utility records at the admission stage?
- What happened when the appellants' compilation of judgments turned out to contain AI-generated nonexistent judgments, and why were no costs ultimately imposed?
