" - 1 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 4520 OF 2026 (GM-RES) BETWEEN: 1. MR. MURALI MOHAN SB S/O S.M BYYANNA AGED ABOUT 38 YEARS R/AT NO. 47/1, 4TH CROSS L.G FOOD ROAD, THAVAREKERE BENGALURU 560 029 EMAIL- MURALIMOHANSB@GMAIL.COM 2. MR. RAVI KUMAR .C S/O MR. CHANDRAPPA .C AGED ABOUT 37 YEARS R/AT NO.270, 6TH A CROSS JAKKUR LAYOUT, BENGALURU - 560 064 EMAIL- RAVI.SONU2128@GMAIL.COM 3. MR. RAJU .N S/O MR. NAGRAJ AGED ABOUT 35 YEARS R/AT NO.29, 9TH MAIN NEAR CHOWDESHWARI BUS STOP AKKIYAPPA GARDEN, MOHANKUMARNAGAR YESHWANTHPUR, BENGALURU-560 022. EMAIL- JOSPHRAJU820@GMAIL.COM 4. MR. SHIVRAJ C S/O MR. CHANDRASHEKHAR .P AGED ABOUT 33 YEARS R/AT NO.14/1, 1ST CROSS PAPIAH LAYOUT V. NAGENAHALLI Printed from counselvise.com Digitally signed by NAGARAJA B M Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 BENGALURU-560 032. EMAIL- SHIVRAJSHEKAR@GMAIL.COM 5. MR. R. ARUN S/O MR. G RAVI AGED ABOUT 34 YEARS R/AT GUDDADAHALLI MAIN ROAD 2ND CROSS, ANANDGIRI EXTENSION HEBBAL, BENGALURU - 560 032 ARUNARUU1991@GMAIL.COM 6. MR. M. DIWAKAR S/O R. MURUGESH AGED ABOUT 28 YEARS R/AT NO. 279, 3RD CROSS 3RD MAIN ROAD, AKBARI MASJID ROAD CHAMUNDINAGAR MAIN ROAD BENGALURU - 560 032 EMAIL- DIWAKAR.M243@GMAIL.COM 7. MR. PURUSHOTHAM S.B. S/O BYANNA AGED ABOUT 32 YEARS R/AT NO. 47/1, 4TH CROSS L.G FOOD ROAD, THAVAREKERE BENGALURU - 560 029 EMAIL- PURUSHOTHAM@BHARATVIKASNETWORKS.COM 8. MR. FAHAD .R.M S/O MUSTHAFA AGED ABOUT 34 YEARS R/AT. RAYAMMARAKKARVEETIL ALOOR, ALOOR MATOM THRISSUR- 680 602 EMAIL- FIDUFAHE@GMAIL.COM 9. MR. SHAMSHEER ANJAM PILAKKEEL S/O UMMAR KP AGED ABOUT 48 YEARS R/AT AL HIMMATH KANNUR Printed from counselvise.com - 3 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 MOWANCHERI, KERALA-670 613 EMAIL- SHAMSHEERANJAM@GMAIL.COM 10. MR. AJAY KUMAR S/O MOHAN RATHOD AGED 31 YEARS R/AT NO. 11-86 NEAR RAILWAY STATION BANJARA NAGAR, CHITTAPUR SHAHABAD, KALBURGO - 585 228 EMAIL- RATHODAJAY0915@GMAIL.COM …PETITIONERS (BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR SRI. SWAROOP .S, ADVOCATE) AND: 1. INDIA HOUSING FUND A CATEGORY II ALTERNATIVE INVESTMENT FUND INCORPORATED UNDER THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE INVESTMENT FUND) REGULATIONS 2012 HAVING ITS REGISTERED OFFICE AT 360 ONE CENTRE, KAMALA MILLS COMPOUND SENAPATI BAPAT MARG, LOWER PAREL MUMBAI - 400 013. REPRESENTED HEREIN BY INVESTMENT MANAGER 360 ONE ALTERNATES ASSET MANAGEMENT LTD. EMAIL- SANDEEP.JOSHI@360.ONE 2. INDIA HOUSING FUND SERIUS-2 A CATEGORY II ALTERNATIVE INVESTMENT FUND, INCORPORATED Printed from counselvise.com - 4 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 UNDER THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE INVESTMENT FUND) REGULATIONS 2012 HAVING ITS REGISTERED OFFICE AT 360 ONE CENTRE, KAMALA MILLS COMPOUND SENAPATI BAPAT MARG, LOWER PAREL MUMBAI - 400 013. REPRESENTED HEREIN BY INVESTMENT MANAGER 360 ONE ALTERNATES ASSET MANAGEMENT LTD. EMAIL- SANDEEP.JOSHI@360.ONE 3. GULAM MUSTAFA ENTERPRISES PVT. LTD. A COMPANY INCORPORATED UNDER THE PROVISION OF THE COMPANIES ACT, 2013 HAVING REGISTERED OFFICE AT NO.6, GM PEARL, I STAGE I PHASE, BTM LAYOUT BENGALURU - 560 068. REPRESENTED BY ITS DIRECTOR AND AUTHORIZED SIGNATORY SRI. GULAM MUSTAFA EMAIL- LEGAL@GMINFINITE.COM …RESPONDENTS (BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR SRI. PINAZ MEHTA, ADVOCATE FOR C/RESPONDENT) THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO SET ASIDE THE ORDER DATED 02.02.2026 PASSED BY THE NCLT IN CP (IB) NO. 90 OF 2026 AT ANNEXURE P AND ETC. Printed from counselvise.com - 5 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 THIS PETITION, COMING ON FOR DICTATING ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM ORAL ORDER The petitioners have approached this Court calling in question the order dated 02.02.2026 passed by the National Company Law Tribunal (for short, “NCLT”) produced at Annexure–P and have also sought a direction to the NCLT to consider the intervening application filed by the petitioners. 2. The brief facts leading to the present petition indicate that respondent No.3 is a builder who undertook a residential project by name “GM Global Techies Town”. The project was approved by the Real Estate Regulatory Authority and the developer had undertaken to deliver the apartments within the timeline stipulated under the agreements entered into with the purchasers. The petitioners claim that they had entered into agreements for sale with respondent No.3 after paying substantial Printed from counselvise.com - 6 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 amounts as advance consideration. According to the petitioners, the project was to be completed within five years from the date of execution of the agreements, with a further grace period of six months. 3. It is the grievance of the petitioners that the construction of the project was not completed within the stipulated time and the work came to a halt for a considerable period. On making enquiries regarding the status of the project, the petitioners claim to have learnt that several proceedings were pending before the Real Estate Regulatory Authority wherein respondent No.3 was not effectively represented. The petitioners further state that several petitions were pending before the NCLT against respondent No.3 and that respondent No.3 had outstanding debts exceeding 600 crores. It is also contended that the project property forming the subject matter of the agreements entered into with the petitioners had been mortgaged in favour of respondent Nos.1 and 2. Printed from counselvise.com - 7 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 4. The petitioners contend that if the applications filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short 'IBC') were to be admitted, the same would directly affect the interests of the petitioners who are homebuyers in the project. In that view of the matter, the petitioners filed an intervention application before the NCLT seeking a limited relief, namely, that the project property relating to the petitioners’ flats be excluded from the Corporate Insolvency Resolution Process. 5. The petitioners further contend that on 02.02.2026, when the matter was listed before the NCLT, the petitioners and respondent Nos.1 and 2 were ready to advance arguments. However, learned counsel appearing for respondent No.3 sought a pass over on the ground that a Senior Counsel was to appear in the matter. Since the Senior Counsel did not arrive in time, the NCLT proceeded to pass the impugned order. Printed from counselvise.com - 8 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 6. Learned Senior Counsel Sri. Dhyan Chinnappa, appearing on behalf of respondent Nos.1 and 2, the financial creditors, would contend that the petition itself is misconceived. Placing reliance on the judgment of the Hon’ble Supreme Court in Elegna Co-operative Housing and Commercial Society Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Another1, he would submit that proceedings under Section 7 of the IBC at the pre-admission stage are proceedings in personam and that neither the adjudicating authority nor the appellate authority is required to hear other creditors or unrelated third parties. It is therefore contended that the petitioners, who claim to be homebuyers, have no locus to intervene at the pre-admission stage. Learned Senior Counsel would further contend that the petitioners have not specifically pleaded any case of fraud and therefore cannot seek to circumvent the settled legal position governing proceedings under Section 7 of the IBC. 1 2026 INSC 58 Printed from counselvise.com - 9 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 7. Per contra, learned Senior Counsel Sri. Uday Holla appearing for the petitioners would contend that the present case involves allegations of fraud and collusion between the developer and the financial creditors. He would therefore submit that the petitioners, being homebuyers whose interests would be directly affected, ought to be permitted to be heard even at the pre- admission stage of the proceedings before the NCLT. 8. This Court has carefully considered the submissions made by the learned Senior Counsel appearing on both sides and have also perused the material placed on record. 9. The principal issue that arises for consideration is whether the petitioners, who claim to be homebuyers in the project undertaken by respondent No.3, have a right of audience before the NCLT at the pre-admission stage of proceedings under Section 7 of the IBC. Printed from counselvise.com - 10 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 10. The said issue is no longer res integra. The Hon’ble Supreme Court in Elegna Co-operative Housing and Commercial Society Ltd. (supra) has clearly held that proceedings under Section 7 of the IBC at the stage prior to admission are in personam, and that the adjudicating authority is only required to examine whether there exists a financial debt and whether a default has occurred. The Hon’ble Supreme Court has categorically held that at such stage neither other creditors nor unrelated third parties are required to be heard. The relevant principle laid down is that when proceedings are in personam, no right of audience inheres in persons who are strangers to the debt and default forming the basis of the application. 11. In the present case, the applications before the NCLT are filed by the financial creditors under Section 7 of the IBC seeking initiation of Corporate Insolvency Resolution Process against respondent No.3. The petitioners admittedly are not the applicants in those Printed from counselvise.com - 11 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 proceedings. The debt and default forming the basis of the Section 7 petitions arise out of financial transactions between the financial creditors and the corporate debtor. The petitioners, who claim to be purchasers of apartments in the project, cannot be treated as necessary parties to such proceedings at the pre-admission stage. 12. Much emphasis was placed by the learned Senior Counsel for the petitioners on the contention that fraud and collusion are alleged and therefore the embargo relating to participation at the pre-admission stage should not apply. 13. This Court has carefully examined the averments made in the affidavit filed in support of the present writ petition. On a close reading of the pleadings, it becomes evident that no specific plea of fraud has been articulated with necessary particulars. The pleadings only contain general allegations and apprehensions regarding the conduct of the developer and the financial creditors. Printed from counselvise.com - 12 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 Such vague allegations cannot be treated as a specific plea of fraud so as to dilute the settled legal position governing proceedings under Section 7 of the IBC. 14. In the absence of a specific and substantiated plea of fraud, the petitioners cannot seek to carve out an exception to the principle laid down by the Hon’ble Supreme Court that at the pre-admission stage of a Section 7 of the IBC proceeding, third parties or other creditors have no independent right of audience before the adjudicating authority. 15. It is also relevant to note that the IBC provides a comprehensive statutory framework governing the rights of various stakeholders once the insolvency process is admitted. At that stage, the Code itself provides mechanisms through which the claims of different classes of creditors, including homebuyers, may be considered in accordance with law. However, permitting intervention by third parties at the threshold stage would run contrary to Printed from counselvise.com - 13 - HC-KAR NC: 2026:KHC:13847 WP No. 4520 of 2026 the scheme of the IBC and the law laid down by the Hon’ble Supreme Court. 16. In view of the authoritative pronouncement of the Hon’ble Supreme Court in Elegna Co-operative Housing and Commercial Society Ltd. (supra), this Court is of the considered opinion that the petitioners, being homebuyers, cannot be treated as necessary parties at the pre-admission stage of proceedings under Section 7 of the IBC, and therefore no enforceable right of audience accrues to them before the NCLT at this stage. 17. Consequently, the challenge to the impugned order dated 02.02.2026 passed by the NCLT does not merit interference by this Court. 18. Accordingly, the writ petition stands dismissed. SD/- (SACHIN SHANKAR MAGADUM) JUDGE CA / List No.: 3 Sl No.: 2 Printed from counselvise.com "