The Supreme Court has upheld the admission of the insolvency cases against GSTAAD Hotels (the JW Marriott, Bengaluru) and Neo Capricorn Plaza (the Crowne Plaza, Pune), and has laid down how courts should prove “default” at the Section 7 stage.
At the admission stage under Section 7 of the IBC, the adjudicating authority only needs to be satisfied, on the preponderance of probabilities from documents, that a default has occurred, and need not reconcile every ledger entry or decide the exact amount due. A Record of Default from an Information Utility is sufficient on its own and can be displaced only by clear and compelling material, and other documents taken collectively can also prove default. A company’s profitability or positive EBITDA is not a defence, since the Code’s trigger is default and not commercial insolvency. An assignee who holds a valid assignment is a “financial creditor”, and the validity of the assignment cannot be reopened if it has been finally decided in other proceedings.
In December 2017, Piramal gave the two companies a Rs 600 crore loan. In December 2022, it assigned the loans, including emergency credit (ECLGS) facilities, to Omkara Assets Reconstruction, which recalled them in February 2023 and filed Section 7 petitions, claiming a default on 15 November 2022. The companies argued that they were profitable hotels, that a cash management agreement and a debt service reserve account (DSRA) would have covered the dues, and that the earlier NCLAT remand had settled these points. The NCLT admitted both petitions again in July 2025, and the NCLAT affirmed this. Justices Dipankar Datta and Augustine George Masih dismissed the appeals. They held that Omkara’s status as assignee had already been upheld by the Karnataka High Court and by the Supreme Court, so the challenge was barred by issue estoppel. At the admission stage, the question is the occurrence of default, which is a “static historical event”, and not the exact quantum, which is “dynamic” and can be verified later by the resolution professional. The proof required is a summary, prima facie one on the preponderance of probabilities. The court set out a two-tier hierarchy of evidence. First, a record of default from an Information Utility is sufficient by itself and carries a high presumption, rebuttable only by “clear, cogent, credible and compelling material”, not bare denial or bookkeeping disputes. Second, other documents, such as the loan agreements, account statements, acknowledgements, settlement proposals and correspondence, can together establish default. The court noted the companies’ own letter of December 2022, their admissions in the Karnataka High Court and their DSCR of only 0.12 for 2022-23. It held that positive EBITDA and profitability are irrelevant to default, since the Code is triggered by default, not insolvency, and found support in the amended Section 7(5), notified in April 2026. In a closing note, the court said that the appellants had filed a compilation of “AI generated non-existent judgments” and had proposed exemplary costs, but made no order as to costs because the first appellant had died.
Citation: Deepak Raheja & Anr. v. Omkara Assets Reconstruction Pvt. Ltd. & Anr., Civil Appeal No. 12195 of 2025 (with Civil Appeal arising out of Diary No. 58001 of 2025), Supreme Court (Justices Dipankar Datta and Augustine George Masih), decided on 15.10.2026 | 2026 INSC 1134
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