Supreme Court Flags Alleged Sham Rs. 85 Crore Claim in AVJ Developers Insolvency Case, Seeks Nationwide Data on NCLT Delays

Lentis Legalis | 16 April 2026
Reviewed by Adv. Chandrasen Yadav

New Delhi, April 29: In a significant hearing concerning the insolvency resolution of AVJ Developers (India) Private Limited, the Supreme Court of India on 16-04-2026 raised serious concerns over an alleged Rs. 85 crore financial claim described before it as “sham and bogus,” while also taking note of increasing delays in approval of resolution plans by insolvency tribunals across the country.

The matter came up in two connected appeals one filed by the AVJ Heightss Apartment Owners Association and another by a suspended director of the corporate debtor. Both appeals challenge a common judgment of the National Company Law Appellate Tribunal (NCLAT), which had upheld the admission of the claim of India Infoline Finance Limited (IIFL).

Disputed Rs. 85 Crore Claim Under Scrutiny

The Bench noted that the Resolution Professional had earlier rejected IIFL’s claim on January 24, 2020, citing inability to verify the claim from the company’s records. However, the National Company Law Tribunal (NCLT) later allowed the claim, and the NCLAT affirmed that decision.

During the hearing, counsel for the appellants argued that the entire claim was fraudulent. The Court was also informed of an arbitral award dated July 3, 2024, containing serious findings concerning the alleged loan transaction of Rs. 85 crores.

According to portions of the award referred to in court, the claimed loan amount was allegedly routed through multiple accounts instead of the sanctioned account, while certain documents relied upon to support the transaction were said to be tainted or inconsistent.

The arbitral tribunal reportedly questioned whether documents were backdated and whether signatures were genuine. It also made observations suggesting attempts to evergreen earlier loan accounts and avoid regulatory classification norms.

Court Concerned Over Delay in Resolution Plan Approval

Apart from the disputed financial claim, the Supreme Court expressed strong concern that the Committee of Creditors (CoC) had approved a resolution plan on July 4, 2024, and an application for approval was filed before the NCLT on July 12, 2024, yet no final adjudication has taken place even after a prolonged period.

Calling the situation “very unfortunate,” the Court observed that many such approval applications are reportedly pending before the NCLT Principal Bench, New Delhi, and other benches for years.

Directions to NCLT and IBBI

The Court directed the Registrar of the NCLT Principal Bench, New Delhi, to furnish details on:

1. Number of pending resolution plan approval applications
2. Duration of pendency
3. Reasons for non-disposal

The Insolvency and Bankruptcy Board of India (IBBI) was also impleaded as a party respondent and directed to place  necessary figures and statistics across the country, within two weeks.

Senior Advocates Appointed as Amicus

The Court requested Gopal Jain and Navin Pahwa, senior advocates, to assist the Court as amici curiae.

Case Title: AVJ HEIGHTSS APARTMENT OWNERS ASSOCIATION VS. IIFL FINANCE LIMITED & OTHERS

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Author
Adv. Chandrasen Yadav
B.Sc., LL.B. & LL.M.