Orris Infrastructure Private Limited v. Rakesh Kumar Gupta & Ors., Civil Appeal Nos. 6797-6801 of 2023 (with connected appeals and contempt petitions), decided on 30.09.2026 | Citation: 2026 INSC 1070
The Supreme Court has held that the insolvency tribunal can cancel an insolvency case started through fraud and collusion, but it need not do so automatically and must decide whether the process should still go on for the benefit of other creditors.
The case concerns Greenopolis, a 1,862-flat housing project in Gurgaon built by Three C Shelters on land owned by Orris Infrastructure. The project had stalled since 2016, and homebuyers were pursuing remedies before the real estate regulator and the consumer commission. In 2020, a company called Straight Edge Contracts claimed to be an unpaid operational creditor for about Rs 29.96 crore and filed an insolvency petition against Three C Shelters. The tribunal admitted the petition on the basis of an affidavit from a Three C Shelters director admitting the debt, and it imposed a moratorium. Later, the tribunal itself found that Straight Edge and Three C’s directors had acted together, that the supposed debt was backed by an unregistered MoU and unproved work, and that the “directors” who admitted it called themselves a pantry boy and an office boy. Still, the tribunal said it had no power to undo its own admission order, while the appellate tribunal (NCLAT) held that such power exists and simply cancelled the entire insolvency process. Justices Pamidighantam Sri Narasimha and Alok Aradhe, hearing appeals by the landowner and homebuyers, affirmed the findings of fraud and collusion and called the debt “a mirage”. They held that the existence of a debt is a “jurisdictional fact” on which the tribunal’s power depends, and that those who invoke the Code have a public law duty not to mislead it. So the tribunal can recall an admission order obtained by fraud. However, once a case is admitted, it becomes a collective process for all creditors, the management passes to the resolution professional, and the original applicant cannot withdraw, so cancelling it is not automatic. The court set aside the NCLAT’s order, restored the insolvency case, and directed the tribunal to decide whether to continue after hearing the resolution professional, the committee of creditors and other stakeholders, including homebuyers, and to finish quickly if it continues. The contempt petitions were closed.
If an insolvency case under Section 7, 9 or 10 of the IBC was started on a fraudulent or collusive basis, the NCLT can recall the admission, because a debt and default are jurisdictional facts and applicants owe a public law duty not to mislead it. Recall is not automatic. Once a case is admitted, it is no longer the property of the original applicant and the debtor and becomes a collective process for all creditors, so the NCLT should decide whether to continue after hearing the resolution professional, the committee of creditors and other stakeholders. The collusive applicant is simply disallowed from participating, and action may be taken against it under Section 65 of the IBC.