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Deepak Raheja and Another v. Omkara Assets Reconstruction Private Ltd. and Another

Civil Appeal · 2026 INSC 1134Decided 15 Oct 2026
Civil Appeal No. 12195 of 2025
Justice Dipankar Datta · Justice Augustine George Masih

Background

Piramal Finance had lent about Rs. 600 crores to two hotel-owning companies (running the JW Marriott Bangalore and Crowne Plaza Pune), later assigned to Omkara Asset Reconstruction. After the borrowers missed instalments and interest from November 2022, Omkara recalled the loans and filed insolvency petitions; the borrowers argued no real default occurred because reserve and escrow accounts should have covered the shortfall and the hotels were profitable. Both the Tribunal and Appellate Tribunal found a genuine default.

Decision Breakdown

The Supreme Court dismissed both appeals, holding that a tribunal need only find a summary, prima facie default, not conduct a full forensic audit, with detailed quantification left for the later claims-verification process. A default authenticated with an official "Information Utility" debt registry is normally sufficient proof, rebuttable only by strong evidence, not bare denials. The Court held a company's accounting profitability is legally irrelevant to whether it can service debt as payments fall due; the real test is actual cash availability, and here the company was covering only about 12% of its obligations. The Court separately flagged that the appellants' lawyers had filed a compilation of case citations containing AI-generated, non-existent judgments, recording it as an "undesirable incident" (no costs imposed only because the lead appellant had since died).

Lesson Learnt

Being profitable on paper does not protect against insolvency proceedings if actual cash payments to lenders are missed: courts admit insolvency cases on a fast, preliminary showing of default. Separately, submitting AI-generated fake case citations to a court is treated as serious professional misconduct.

Official source (sci.gov.in)View Judgment (PDF)

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