NCLAT upholds NCLT dismissal of Wave Megacity insolvency plea

What the Record Shows

The National Company Law Tribunal (NCLT), by a reasoned order in June 2022, dismissed Wave Megacity Centre Private Limited's own petition under Section 10 of the Insolvency and Bankruptcy Code (IBC) and imposed costs of Rs 1 crore on the company. The Bench comprised Bhaskara Pantula Mohan (Member, Judicial) and Hemant Kumar Sarangi (Member, Technical). Homebuyers had objected that the petition was not filed for a genuine resolution, and the Tribunal held that the company, under the guise of IBC proceedings, had attempted to play a fraud on stakeholders, adding that using insolvency to legitimise illegal acts cannot be permitted.

This is not a journalist's characterisation or an agency's allegation; the finding of an attempt to defraud stakeholders is the Tribunal's own, recorded in a reasoned order and attributed here to the Bench. The company had booked around 2,300 flats in Noida and, per the record, promised possession within about four years, with buyers paying more than Rs 1,400 crore towards the project; more than a decade later it remained incomplete.

The order was not the end of the matter. On appeal, the National Company Law Appellate Tribunal (NCLAT), in Company Appeal (AT) (Insolvency) No. 918 of 2022, by order dated 5 January 2023, upheld the dismissal and confirmed the Tribunal's view. The impugned NCLT order is cited in the appellate and High Court records as dated 6 June 2022. The self-insolvency petition itself, per those records, had been filed on 25 March 2021.

How It Worked

Section 10 of the IBC lets a company that has defaulted file for its own insolvency, and admission brings a moratorium that freezes claims and recovery against it. The homebuyers argued, and the Tribunal accepted, that Wave Megacity Centre had sought to use that shield against the very buyers and creditors it owed, rather than to resolve the debt. The company's petition claimed default on dues owed to the Noida Authority, from which it had leased the land.

The buyers invoked Section 65 of the IBC, which lets the Tribunal penalise a person who initiates insolvency proceedings "fraudulently or with malicious intent" for any purpose other than resolution. The NCLT allowed the Section 65 applications and dismissed the Section 10 petition with costs. On appeal, the NCLAT held that the application had been "filed with malicious and fraudulent intent, to cause injury to the stakeholders", and pointed to circumstances including directors resigning immediately before the filing and a former director appearing as a financial creditor.

The commercial chronology sits behind the legal one. Bookings were taken years earlier against a promise of possession that, per the record, fell due around 2016; that deadline passed with the project unfinished; the Section 10 petition followed in March 2021; the Tribunal dismissed it in June 2022; and the NCLAT confirmed that dismissal in January 2023. At each stage the adverse characterisations are the tribunals' findings, attributed to them, and not established facts of criminal wrongdoing.

Who Lost Money

The people out of pocket are the buyers of roughly 2,300 flats who, per the record, paid more than Rs 1,400 crore towards a project that was promised for delivery around 2016 and remained incomplete more than a decade after bookings began. Many had paid the bulk of the price up front. The individual buyers who objected before the Tribunal are private persons, and their names and figures are not reproduced here; only the aggregate stated in the record is used.

What buyers have recovered is, so far, little. The dismissal of the Section 10 petition stopped the company from obtaining the IBC moratorium, which the homebuyers had feared would have frozen their claims and delayed possession further, but it did not by itself deliver homes or refunds. Recovery and completion for a stalled township of this size run through a mix of regulatory, insolvency and civil routes, each slow, and the sums buyers ultimately receive typically fall well short of what was paid.

Where It Stands Now

The dismissal stands and has been tested on appeal. The NCLAT dismissed the company's appeal on 5 January 2023 with no costs, upholding the NCLT's order and its reasoning. Beyond the insolvency forum, the Ministry of Corporate Affairs initiated an investigation into the company, recorded in the High Court proceedings as begun on 5 October 2023, which was noted to be ongoing. That investigation is an examination, not a finding: it is at the inquiry stage and establishes no wrongdoing by any individual.

More recently, the Delhi High Court quashed Look Out Circulars issued against directors of the company, recording that they had cooperated and that no adverse observation had been made against their conduct in that context. A dismissal under Section 65, an appellate confirmation and an ongoing investigation contain findings and allegations, not a criminal conviction; no individual named in these proceedings has been convicted of an offence, the presumption of innocence continues, and due process is ongoing.

What It Means

The case is the clearest illustration of a risk the IBC's drafters tried to close: that a developer might file for its own insolvency to obtain the moratorium as a shield against the homebuyers the law was later amended to protect as financial creditors. Section 65 is the counter-measure, letting a tribunal look behind a self-insolvency petition and penalise one filed for a purpose other than genuine resolution. Here the homebuyers' objection, not the developer's petition, prevailed.

For a buyer, the practical lesson is that possession delays and a developer's own insolvency filing are different problems with different remedies, and both a RERA authority and, where relevant, the insolvency forum may be in play at once. Before committing, a buyer can verify a project's registration and progress on the relevant RERA register, and can model the trade-offs of a purchase with Oquilia's real-estate ROI calculator. Related tribunal and regulator actions can be followed through the enforcement archive, alongside other NCLT and court orders, and reports such as UP RERA's de-registration of Ansal API projects.

FAQ

Does this mean the people named are guilty?

No. The NCLT's dismissal under Section 65, the NCLAT's confirmation and the Ministry of Corporate Affairs investigation contain findings and allegations tested to a civil standard or still under inquiry, not findings of criminal guilt. No individual named in these proceedings has been convicted of an offence; the presumption of innocence continues and due process is ongoing.

What did the NCLT actually order?

Per the Tribunal's order, the NCLT dismissed Wave Megacity Centre's own Section 10 insolvency petition, allowed the homebuyers' Section 65 applications, and imposed costs of Rs 1 crore, holding that the company had attempted to play a fraud on stakeholders by seeking to misuse the insolvency process.

Was the dismissal appealed?

Yes. The company appealed to the NCLAT in Company Appeal (AT) (Insolvency) No. 918 of 2022. By order dated 5 January 2023 the NCLAT dismissed the appeal with no costs, holding that the petition had been filed "with malicious and fraudulent intent, to cause injury to the stakeholders", and upheld the NCLT's order.

Have homebuyers got their money back?

Not through this order. Defeating the Section 10 petition prevented a moratorium that buyers feared would freeze their claims, but it did not itself deliver flats or refunds. Recovery and completion for a stalled project of this size run through slow regulatory, insolvency and civil routes, and buyers typically recover far less than they paid.

What is a Section 10 petition, and what is Section 65?

Section 10 of the IBC lets a company that has defaulted file for its own insolvency, triggering a moratorium on claims against it. Section 65 lets the Tribunal penalise anyone who initiates insolvency "fraudulently or with malicious intent" for a purpose other than resolution. The homebuyers relied on Section 65 to defeat the company's Section 10 filing.

Where can I read the official record?

The NCLAT order dated 5 January 2023 upholding the dismissal, and a Delhi High Court order recording the later procedural history, are both on the public record and reproduced on Indian Kanoon.

This report is based on the NCLAT order dated 5 January 2023 in Company Appeal (AT) (Insolvency) No. 918 of 2022 and a Delhi High Court order recording the subsequent procedural history, reviewed on 30 July 2026.