Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 1557

NATIONAL COMPANY LAW TRIBUNAL
Nilesh Sharma, Judicial Member, Sameer Kakar, Technical Member
Beacon Trusteeship Limited – Appellant
Versus
Transcon Buildcon Private Limited – Respondent
I.A (I.B.C)/5793(MB)2025 | C.P. (IB)/697/MB/2025

Advocates:
For the Petitioner:S and T Legal
For the Respondent:INDUS LAW

Once a financial debt and default are established, an application under Section 7 of the Insolvency and Bankruptcy Code must be admitted. Extraneous disputes, such as non-disbursal of funds or pending arbitration, do not bar the admission of such applications as the Adjudicating Authority's enquiry is limited to existence of default.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 7, 14, and 60(5) - Initiation of Corporate Insolvency Resolution Process (CIRP) - Financial debt and default - Existence of debt and default exceeding threshold - Admissibility of application - Once a financial creditor establishes the existence of a debt and default, the Adjudicating Authority is required to admit the application without examining extraneous disputes like non-disbursal of funds or pendency of arbitration. (Paras 8.9, 8.12, 8.15)

(B) Corporate Guarantee - Liability of guarantor - Co-extensive liability - The liability of a guarantor arises on demand and is governed by the terms of the guarantee deed - The guarantor acts as a primary obligor, and its liability continues until the debt is fully discharged. (Paras 8.19, 8.21, 8.22)

(C) Scope of Enquiry - Adjudicating Authority’s role - The Adjudicating Authority is not required to investigate the reasons for the default or the financial viability/commercial wisdom of the corporate debtor; it only needs to ascertain the occurrence of default based on evidence of a debt that is due and payable. (Paras 8.14, 8.27, 8.31)

Facts of the case:
A financial creditor, acting as a debenture trustee, initiated insolvency proceedings against a corporate debtor that had provided a corporate guarantee for debentures issued by a third party. The corporate debtor challenged the maintainability of the petition, arguing that the financial agent's failure to disburse the full sanctioned amount caused the default, that the claims were subject to arbitration, and that the petition was a malicious attempt to disrupt business.

Findings of Court:
The Adjudicating Authority found that the financial creditor successfully proved the existence of a financial debt and a default in payment. It held that the terms of the debenture trust deed did not mandate full disbursement as a condition precedent for repayment. It further observed that the corporate debtor’s contentions regarding non-disbursal and pending arbitration did not negate the obligation to repay. The settlement proposal submitted by the corporate debtor was viewed as a tacit admission of debt.

Issues: The main issues were whether the non-disbursal of the full sanctioned amount by the lender excuses the corporate debtor from its repayment obligation, and whether pendency of arbitration proceedings precludes the initiation of insolvency proceedings.

Ratio Decidendi: An application under the Code for financial default is to be admitted if the debt is due and in default, regardless of any underlying disputes related to the performance of contractual obligations or pending arbitration, as the Code provides an overriding mechanism for resolution.

Result: Application admitted. CIRP initiated against the corporate debtor.

ORDER

[PER: BENCH]

1. BACKGROUND

1.1 This is an Application bearing C.P. (IB) No.697/MB/2025 filed on 17.07.2025 by Beacon Trusteeship Limited, the Applicant (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as “the AAA Rules”) through Mr. Nanda Sitabe Sahani – Junior Associate of the Applicant vide Board Resolution dated 28.06.2024 for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Transcon Buildcon Pvt. Ltd., the Corporate Debtor (CD).

1.2 The Applicant is acting in its capacity as a Debenture Trustee. The CD is a real estate development company. The CD herein is a corporate guarantor in respect of the non-convertible debentures issued by the Principal Borrower i.e., Transcon Skycity Private Limited to different debenture-holders, in respect of which the Applicant is acting as a Debenture Trustee.

1.3 The Applicant has proposed the name of Mr. Amit Vijay Karia having registration no. IBBI/IPA-001/IP-P-02600/2021-2022/13969 to act as an IRP along with his written communication in Form-2 and valid AFA till 31.12.2025. On perusal of the IBBI website, it is seen that the AFA of the IRP is valid till 31.12.2026.

1.4 The Applicant has relied on the following documents:

i. Copy of Master Data of the Applicant and Corporate Debtor

ii. Copy of Board Resolution in favour of the authorized signatory dated 28.06.2024

iii. Copy of Form 2 by the IRP dated 21.05.2025.

iv. Copy of the Form No. PAS-3 read with the board resolutions, evidencing allotment of debentures amounting to INR 62.39 crores by Transcon Skycity Private Limited

v. Copy of the Debenture Trustee Appointment Agreement dated 11.05.2022.

vi. Copy of the Debenture Trust Deed Cum Mortgage dated 11.05.2022.

vii. Copy of the Escrow Agreement dated 12.05.2022.

viii. Copy of the Deed of Corporate Guarantee dated 12.05.2022 of the Corporate Debtor.

ix. Copy of the Share Pledge Agreement dated 12.05.2022.

x. Copy of the Deed of Personal Guarantee dated 12.05.2022.

xi. Copy of the Deed of Hypothecation dated 12.05.2022.

xii. Copy of the Demand Promissory Note dated 11.05.2022.

xiii. Copy of the Letter of Continuity for the Demand Promissory Note dated 11.05.2022.

xiv. Copy of the Default Notice dated 31.05.2023, 25.08.2023 and 15.02.2024.

xv. Copies of the Default Notice dated 03.02.2025 issued by Applicant and Facility Agent.

xvi. Copies of the Compulsory Redemption Notice dated 25.02.2025 issued by Financial Creditor and Facility Agent.

xvii. Copy of the Invocation of Corporate Guarantee Notice dated 13.03.2025.

xviii. Copy of the Invocation of Personal Guarantee of Mr. Aditya Kedia and Ms. Kirti Kedia dated 13.03.2025

xix. Copy of the Invocation of Share Pledge Notice dated 13.03.2025.

xx. Copy of the Demand Notice dated 21.03.2025 issued by the Debenture Trustee’s advocates.

xxi. Copy of the Order dated 09.05.2025 passed by the Bombay High Court in Commercial Arbitration Petition No. 389 of 2025.

xxii. Copy of Record of Default with Information Utility

xxiii. Copy of the Board Resolution of New India Builders for creation of security in favour of the Financial Creditor dated 09.04.2022.

xxiv. Copy of the Board Resolution of the Corporate Debtor and Transcon Skycity Private Limited authorizing the execution of the documents in relation to the issuance of debentures dated 09.04.2022.

xxv. Copy of the Power of Attorney dated 12.05.2022 in favour of the financial creditor to accomplish the purposes of the Deed of Hypothecation and Share Pledge Agreement.

xxvi. Copy of the financial statements of the Corporate Debtor for the year 2023-2024

xxvii. Copy of the Certificate of Registration of Charge dated 29.06.2022 by the Registrar of Companies

xxviii. Copy of the CERSAI Acknowledgment Report in respect of registration of security interest a

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2026 Supreme(Online)(NCLT) 1557

NATIONAL COMPANY LAW TRIBUNALNilesh Sharma, Judicial Member, Sameer Kakar, Technical MemberBeacon Trusteeship Limited – AppellantVersusTranscon Buildcon Private Limited – RespondentI.A (I.B.C)/5793(MB)2025 | C.P. (IB)/697/MB/2025

Cases Referred (1)

NATIONAL COMPANY LAW TRIBUNAL
Nilesh Sharma, Judicial Member, Sameer Kakar, Technical Member
Beacon Trusteeship Limited – Appellant
Versus
Transcon Buildcon Private Limited – Respondent
I.A (I.B.C)/5793(MB)2025 | C.P. (IB)/697/MB/2025