Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 13

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
ASHOK BHUSHAN, J
Surender Singh – Appellant
Versus
IDBI Trusteeship Services Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 266 of 2026 | C.P. (IB) No. 45/Chd/Hry/2024

Advocates:
For the Appellants/Petitioners: Mr. Kapil Sibbal, Mr. Virender Ganda, Mr. Arun Kathpalia, Mr. Vishal Ganda, Mr. Ayandeb Mitra, Ms. Manisha Singh, Ms. Diksha, Ms. Riya Palnitkar
For the Respondents: Mr. Gopal Jain, Mr. Nalin Kohli, Mr. Abhijeet Sinha, Ms. Meghna Mishra, Mr. Nikhil Ratti Kapoor, Yashodhara Gupta, Mr. Kevin Chadha, Mr. Saikat Sarkar, Mr. Gaurav Mitra, Mr. Adhish Srivastava, Mr. Rudreshwar Singh, Mr. Eklavya Dwivedi, Mr. Akshay Srivastava, Mr. Vivek Kumar, Ms. Raveena Paniker, Mr. Aditya Rathi, Mr. Sumesh Dhawan, Mr. Kartik Nayar, Mr. Divyansh Rai

CIRP against real estate firm for project-specific debenture default upheld but confined to that project, not entire debtor, protecting other solvent projects/homebuyers per binding precedents.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 3(8), 7, 7(5)(a) - Initiation of CIRP against real estate company - Debt and default proved by debenture trustee for unpaid interest (₹29.72 crore) despite inflated claim of ₹274 crore including principal not due until extension date - Extension of principal repayment does not waive interest obligations; default established exceeding threshold even after subsequent payments during pendency - CIRP initiation upheld but scope confined to specific project where securities created (mortgage on project land, hypothecation of receivables, escrow), not entire corporate debtor with multiple projects. (Paras 19-21, 65)

(B) Insolvency and Bankruptcy Code, 2016 - Project-wise insolvency for real estate developers - Code contemplates insolvency of corporate debtor, not individual project; however, where debt/securities project-specific (DTD defining project/property, requiring NOC for unit sales, project monitoring), CIRP limited to that project to protect solvent projects/homebuyers - Adjudicating authority erred rejecting project-wise CIRP contrary to binding precedents recognising project-specific process over whole-entity insolvency. Regulations 4D, 36A enable post-admission project-wise resolution, but initiation too project-confined if justified. (Paras 22-36, 64-65)

(C) Debenture Trust Deed - Event of default - Notice demanding interest triggers cure period; absent post-cure acceleration notice recalling principal, only interest default crystallises - Principal not due pre-extension; inflated default claim incorrect but does not vitiate admission where threshold met. (Paras 11-19)

Facts of the case:
Suspended director of real estate corporate debtor appealed NCLT order admitting Section 7 application by debenture trustee for default under DTD funding specific project (land 12.212 acres). Principal extended to 30.06.2024; interest default from 15.03.2022 (₹29.72 crore notice 29.12.2023); Section 7 filed 24.01.2024 claiming ₹274 crore; ₹37.2 crore paid pendente lite; NCLT admitted rejecting project-wise plea.

Findings of Court:
Debt/default proved for interest; principal claim erroneous; payments pendente lite do not cure pre-filing default; DTD securities project-specific ('Project Aspirations'); CIRP confined thereto, IRP to revise claims/publication; other projects unaffected.

Issues: (I) Default quantum (interest vs. full principal); (II) Debt/default proof; (III) Cure by pendente lite payments; (IV) Project-wise insolvency viability; (V) DTD project-specific nature; (VI) CIRP scope; (VII) Relief.

Ratio Decidendi: CIRP admissible on proved default but, for project-funded real estate debtors with ring-fenced securities, must limit to project avoiding collateral damage to unrelated assets/homebuyers; binding precedents mandate project-wise approach over whole-entity dragnet.

Result: Appeal partly allowed; NCLT order modified confining CIRP to specified project; date of commencement unchanged.

Table of Content
1. background facts of debenture issuance and defaults. (Para 1 , 2)
2. parties' arguments on debt, default, and project-wise insolvency. (Para 3 , 4 , 5 , 6)
3. default proven for interest but not principal; payments don't cure default. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21)
4. project-wise insolvency permissible for real estate under binding precedents. (Para 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36)
5. debentures tied to specific project 'aspirations'; securities project-specific. (Para 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64)
6. cirp confined to project aspirations; order modified accordingly. (Para 65)

JUDGMENT

ASHOK BHUSHAN, J.

This appeal has been filed by a suspended director of the corporate debtor, Vatika Limited challenging the order dated 03.02.2026 passed by the adjudicating authority (National Company Law Tribunal, Chandigarh Bench, Court I, Chandigarh) admitting a Section 7 application filed by the IDBI Trusteeship Services Limited, respondent No. 1 herein. Aggrieved by the order of the adjudicating authority initiating Corporate Insolvency Resolution Process (CIRP) against the corporate debtor appointing an Interim Resolution Professional (IRP) and imposing moratorium, this appeal has been filed.

2. Brief background facts of the case necessary to be noticed for deciding the appeal are:

i. The corporate debtor, Vatika Limited is a company engaged in the business of Real Estate Development. The corporate debtor is developing multiple residential and commercial projects across the state of Haryana and National Capital Territory Region.

ii. On 30.06.2017, corporate debtor entered into Debenture Trust Deed (DTD) with IDBI Trusteeship Limited (Debenture Trustee) acting as a Debenture Trustee on behalf of the Indiabulls India Opportunities Fund and Indiabulls High Yield Fund for the issuance of 1,460 fully secured renewable and Non-Convertible Debentures having a value aggregating to total of ₹146 crore.

iii. The issuance of debenture was protected by various securities provided by the corporate debtor, including mortgage over the project land, assignment of receivables, Escrow Account for project, revenue and other securities. Term of the debenture was for 48 months from the investment date until 30.06.2021.

iv. By first Amendment of DTD dated 28.06.2021 term of the debenture was extended till 30.06.2022. On corporate debtor’s last request being on 26.06.2023, respondent vide letter dated 27.06.2023, granted extension of redemption date till 30.06.2024.

v. On 01.09.2023, IDBI Trusteeship issued a notice seeking payment of ₹24,26,61,821/- along with an additional coupon @ 5% per annum within 15 days from the receipt of the notice.

vi. On 09.10.2023, the corporate debtor prayed for No-Objection Certificate (NoC) for sale of various units in the ‘Project Aspirations’. The IDBI Trusteeship vide letter dated 30.10.2023, granted no objection to sale of various plots in ‘Project Aspirations’, Gurgaon.

vii. On 29.12.2023, another notice was issued by Debenture Trustee seeking payment of ₹29,72,29,959/- along with the additional coupon @ 5% per annum within 15 days from the receipt of the said notice. No payment having been received from the corporate debtor that Debenture Trustee filed an application on 24.01.2024 under Section 7, claiming amount of default of ₹274,13,45,241/-.

viii. Date of default was mentioned as 15.06.2022. Notice was issued under Section 7 application. Reply was filed by the corporate debtor raising various objections to the Section 7 application. It was pleaded that by consent extension for repayment of debenture was on 30.06.2024, whereas application under Section 7 has been filed on 24.01.2024, which is prior to date of redemption to debentures.

ix. It was pleaded that request for 57 NoC was made on 22.05.2024, but not a single NoC was r

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2026 Supreme(Online)(NCLAT) 13

NATIONAL COMPANY LAW APPELLATE TRIBUNALASHOK BHUSHAN, JSurender Singh – AppellantVersusIDBI Trusteeship Services Ltd. – RespondentCompany Appeal (AT) (Insolvency) No. 266 of 2026 | C.P. (IB) No. 45/Chd/Hry/2024

CIRP against real estate firm for project-specific debenture default upheld but confined to that project, not entire debtor, protecting other solvent projects/homebuyers per binding precedents.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
ASHOK BHUSHAN, J
Surender Singh – Appellant
Versus
IDBI Trusteeship Services Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 266 of 2026 | C.P. (IB) No. 45/Chd/Hry/2024