1. An application under the insolvency law for initiating corporate resolution process by a debenture trustee against a corporate debtor was dismissed, raising issues of loan restructuring and defaults. (Para 1 , 2 )
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2026 Supreme(SC) 201
SUPREME COURT OF INDIA
Sanjay Kumar, K. Vinod Chandran, JJ.
Catalyst Trusteeship Ltd. – Appellant
Versus
Ecstasy Realty Pvt. Ltd. – Respondent
Civil Appeal No. 7424 of 2025
Decided On : 24-02-2026
Advocates appeared:
For the Appellant(s) : Mr. Aryama Sundaram, Sr. Adv. Mr. Himanshu Tyagi, Adv. Mr. Lakshay Saini, Adv. Ms. Rohini Mussa, Adv. Mr. Mohit Yadav, Adv. Ms. Akanksha Mehra, AOR
For the Respondent(s): Mr. Ashwani Kumar, Sr. Adv. Mr. Amit Sharma, AOR Mr. Virag Gupta, Adv. Mr. Dipesh Sinha, Adv. Ms. Pallavi Barua, Adv. Ms. Aparna Singh, Adv.
For the Appellant(s) : Mr. Aryama Sundaram, Sr. Adv. Mr. Himanshu Tyagi, Adv. Mr. Lakshay Saini, Adv. Ms. Rohini Mussa, Adv. Mr. Mohit Yadav, Adv. Ms. Akanksha Mehra, AOR
For the Respondent(s): Mr. Ashwani Kumar, Sr. Adv. Mr. Amit Sharma, AOR Mr. Virag Gupta, Adv. Mr. Dipesh Sinha, Adv. Ms. Pallavi Barua, Adv. Ms. Aparna Singh, Adv.
The court emphasized that a corporate debtor's restructuring proposal must receive proper written approval from all debenture holders as stipulated in the Debenture Trust Deed, failing which the initiation of insolvency proceedings is warranted under Section 7 of the Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Corporate insolvency resolution process - Dismissal of application by NCLT confirmed by NCLAT - Court held that the restructuring proposal lacked absolute consent from all debenture holders as required by the Debenture Trust Deed (DTD) - The NCLT and NCLAT erred in dismissing the application despite the applicant's financial creditor status and acknowledged default - Court concluded that the absence of written consent and correct procedure negated the restructuring claims. (Paras 24, 12, 18)
(B) Financial Debtors - Adjudicating authority's role - The requirement for initiation of corporate insolvency resolution process is merely to establish financial debt and default, without a necessity to examine disputes related to the debt. (Paras 12)
(C) Debenture Trust Deed - Amendments - Any modification to the DTD must be in writing and with approval from the debenture trustee and holders, as per clauses 33, 33.1, and 33.2 of the DTD - Lack of adherence to said procedure entails the validity of further claims. (Paras 14, 15)
(D) Discussions and Communications - Not being aware of restructuring by the debenture trustee nor consent communicated invalidates respondent's claims based on those discussions. (Paras 9, 10)
Judgement Key Points
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['२०२६ सर्वोच्च(एससी) २०१
२०२६ आयएनएससी १८६
भारतीय सर्वोच्च न्यायालय
संजय कुमार, के. विनोद चंद्रन, न्यायमूर्ती.
कॅटालिस्ट ट्रस्टीशिप लि. – अपीलकर्ता
विरुद्ध
इक्स्टसी रिअल्टी प्रा. लि. – प्रतिवादी
सिव्हिल अपील क्र. ७४२४ ऑफ २०२५
निर्णय दिनांक : २४-०२-२०२६
न्यायालयाने जोरदारपणे सांगितले की, कॉर्पोरेट डेब्टरच्या पुनर्रचना प्रस्तावाला डेबेंचर ट्रस्ट डीडमध्ये नमूद केलेल्या सर्व डेबेंचर धारकांकडून योग्य लिखित मंजुरी मिळणे आवश्यक आहे, अन्यथा कोडच्या कलम ७ अंतर्गत दिवाळखोरी कार्यवाही सुरू करण्यास योग्य आहे.
दिवाळखोरी - कॉर्पोरेट दिवाळखोरी निराकरण प्रक्रिया
संदर्भित
:करार कायदा
(A) दिवाळखोरी आणि दिवाळखोरी संहिता, २०१६ - कलम ७ - कॉर्पोरेट दिवाळखोरी निराकरण प्रक्रिया - एनसीएलटीद्वारे अर्ज नाकारण्याची पुष्टी एनसीएलएटीने केली - न्यायालयाने नमूद केले की पुनर्रचना प्रस्तावाला डेबेंचर ट्रस्ट डीड (डीटीडी) नुसार सर्व डेबेंचर धारकांकडून पूर्ण सहमती नव्हती - अर्जदाराच्या आर्थिक विश्वासू स्थिती आणि मान्य झालेल्या डिफॉल्ट असूनही एनसीएलटी आणि एनसीएलएटीने अर्ज नाकारण्यात चूक केली - न्यायालयाने नमूद केले की लिखित सहमती आणि योग्य प्रक्रियेच्या अभावामुळे पुनर्रचना दावे रद्द झाले. (पराग्राफ्स २४, १२, १८)
(B) आर्थिक डेब्टर्स - निर्णय घेणाऱ्या प्राधिकाराची भूमिका - कॉर्पोरेट दिवाळखोरी निराकरण प्रक्रिया सुरू करण्यासाठी केवळ आर्थिक कर्ज आणि डिफॉल्ट सिद्ध करणे आवश्यक आहे, कर्जाशी संबंधित वाद तपासण्याची गरज नाही. (पराग्राफ्स १२)
(C) डेबेंचर ट्रस्ट डीड - सुधारणा - डीटीडीमध्ये कोणत्याही बदलासाठी लिखित स्वरूपात आणि डेबेंचर ट्रस्टी आणि धारकांच्या मंजुरीसह असणे आवश्यक, डीटीडीच्या कलम ३३, ३३.१, आणि ३३.२ नुसार - अशा प्रक्रियेचे पालन न केल्यास पुढील दाव्यांची वैधता प्रभावित होते. (पराग्राफ्स १४, १५)
(D) चर्चा आणि पत्रव्यवहार - डेबेंचर ट्रस्टीला पुनर्रचनेची माहिती नसणे किंवा सहमती संप्रेषित न केल्याने प्रतिवादीचे अशा चर्चांवर आधारित दावे अवैध ठरतात. (पराग्राफ्स ९, १०)
वकिलांची यादी
अपीलकर्ता(s) साठी : श्री. आर्यमा सुंदरम, सीनियर अॅडव्ह. श्री. हिमांशू ट्यागी, अॅडव्ह. श्री. लक्षय सैनी, अॅडव्ह. कु. रोहिणी मुसा, अॅडव्ह. श्री. मोहित यादव, अॅडव्ह. कु. अकांक्षा मेहरा, एओआर
प्रतिवादी(s) साठी : श्री. अश्वनी कुमार, सीनियर अॅडव्ह. श्री. अमित शर्मा, एओआर श्री. विराग गुप्ता, अॅडव्ह. श्री. दीपेश सिन्हा, अॅडव्ह. कु. पल्लवी बरुआ, अॅडव्ह. कु. अपर्णा सिंग, अॅडव्ह.
आ内容 तक्ता
१.संदर्भित पूर्व कार्यवाहींची तपशीलवार
Legal Category Hierarchy
- insolvency and bankruptcy law
- contract law
- practice and procedure
Table of Contents
2. The debtor contended that a restructured loan agreement subsisted, while the creditor asserted that explicit modification procedures were not followed and a financial default occurred. (Para 3 , 4 , 5 , 6 , 7 , 8 )
3. The courts below erred by erroneously inferring a binding modification of the trust deed from informal communications and failing to recognize the requirement for formal written approval. (Para 9 , 10 , 11 , 16 , 17 , 18 , 19 , 20 , 21 , 22 )
4. Adjudicating authorities under the insolvency law must strictly enforce the procedure for modifying debenture trust deeds and cannot rely on oral or informal communications to establish novation. (Para 12 , 14 , 15 , 18 )
5. The impugned judgments were set aside, and the insolvency petition was ordered to be admitted for further proceedings as per law. (Para 23 , 24 )
6. Can an insolvency application for a financial debt be dismissed based on an alleged pre-existing dispute or ongoing restructuring negotiations?
No. Unlike operational creditor claims, the adjudicating authority only needs to satisfy itself that a financial debt exists and a default has occurred; disputes regarding restructuring that do not comply with the written procedures in the underlying contract do not preclude admission of a Section 7 application. (Para 12 , 18 )
7. Does a debenture trustee have the authority to unilaterally bind debenture holders to a loan restructuring proposal?
No. Modifications to debenture trust deeds must follow defined procedures, including obtaining the consent of debenture holders through approved instructions or special resolutions as stipulated in the trust deed. Informal communications or negotiations with individual debenture holders cannot override these formal contractual requirements. (Para 13 , 14 , 15 )
8. What standard should the adjudicating authority apply when examining evidence of debt and default under the insolvency code?
The authority must examine if the debt is due and payable, evidenced by records of an information utility or proof of default. It should not substitute the binding terms of a contract or the specific modification procedures prescribed in the deed with surmises or conjectures regarding informal conduct or expectations. (Para 12 , 19 , 22 , 23 )
JUDGMENT :
SANJAY KUMAR, J
1. Refusal to initiate corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 1 [For short, ‘the Code’] , against Ecstasy Realty Pvt. Ltd., the respondent, is in issue. CP (IB) 922/MB/C-I/2022 filed in that regard by Catalyst Trusteeship Ltd. (hereinafter, referred to as ‘the debenture trustee’) was dismissed by the National Company Law Tribunal, Mumbai Bench-I (‘NCLT’), vide order dated 03.02.2023. The same stood confirmed in appeal by the National Company Law Appellate Tribunal, Principal Bench, New Delhi (‘NCLAT’), vide judgment dated 16.04.2025 passed in the debenture trustee’s Company Appeal (AT) (Insolvency) No. 467 of 2023. Aggrieved thereby, the debenture trustee is in appeal before this Court under Section 62 of the Code.
2. The respondent company proposed to erect a residential-cum-retail project in Mumbai and to meet its requirement of funds in that regard, it proposed to issue 850 redeemable non-convertible debentures of the value of Rs.850 crore in two series, viz., Series A and Series B. The resolution in this regard was passed by the Board of Directors of the respondent company on 20.03.2018. On the same day, the debenture trustee was appointed on behalf of the debenture holders. A Debenture Trust Deed (DTD) was executed between the debenture trustee, the respondent company and Shobhit J. Rajan, the mortgage provider, on 27.03.2018. Series A debentures to the tune of Rs.600 crore were fully subscribed by the debenture holders and the entire amount was disbursed to the respondent company on 28/29.03.2018. ECL Finance Limited (ECLF), Edelweiss Finvest Pvt. Ltd., Barbelo Estates LLP, an entity of the Edelweiss group, and other directors/associates held these debentures. Series B debentures, amounting to Rs.250 crore, never came to be issued.
3. While so, on 16.03.2022, the respondent company addressed an e-mail to ECLF proposing the restructuring of the loan repayment under the debentures, requesting for principal and interest moratorium of 18 months in respect of the balance debentures apart from other relaxations, including release of the Bandra property, mortgaged by its sister concern, Variegate Real Estate Pvt. Ltd., and release of Rs.25 crore, so as to continue with the documentation process for the Sapphire (Blackrock) transaction. On 23.03.2022, ECLF informed the respondent company that, subject to completion of the Sapphire transaction by 25.03.2022, it was agreeable to providing restructuring along with principal and interest moratorium of 18 months for the balance debentures and for release of the Bandra property from the security package. On 29.03.2022, by way of an e-mail, the respondent company assured ECLF about completion of the Sapphire transaction and sought confirmation of the restructuring proposal. It also stated that it was awaiting a NOC from the debenture trustee and that the same was required urgently. On 30.03.2022, ECLF replied by e-mail, informing the respondent company that it was agreeable to provide extension but would need to run the entire process internally based on the overall resolution plan and the final restructuring approval would be provided around the month of June, 2022. Reference was also made to issuance of a NOC by the debenture trustee and the respondent company was informed that if it had any issues with the date of the said certificate, it could reach out to the debenture trustee, which would do the needful.
4. In this regard, we may note that the respondent company addressed letter dated 23.03.2022 to the debenture trustee seeking its NOC to avail funding from India Credit Investment Fund to the tune of Rs.152 crore, through non-convertible debentures, against a charge on 18 unsold flats in Phase I of the project along with the receivables of sold flats, aggregating to Rs.4.42 crore, and requested for issuance of a NOC and for release of the charge on the 18 unsold flats and receivables of Rs.4.42
