NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) has overturned an NCLT decision allowing insolvency proceedings against Embassy Development, a real estate firm.
In December 2025, the Delhi bench of the National Company Law Tribunal (NCLT) ordered the initiation of insolvency against Embassy Development following a petition by Canara Bank. The bank claimed that Embassy Development owed ₹200 crore as a corporate guarantor for a loan given to Indiabulls Realtech (now Simar Thermal Power).
This NCLT decision was appealed by Rajesh Kaimal, a member of the suspended board of Embassy Development.
The NCLAT ruled that the default claimed by Canara Bank occurred “within the Section 10A period” of the Insolvency & Bankruptcy Code (IBC).
Section 10A prohibits corporate insolvency proceedings for any default arising after March 25, 2020, for one year. This was included in the IBC by the government to assist businesses as economic activities resumed post-COVID-19 lockdowns.
“The Adjudicating Authority (NCLT) erred in not acknowledging the Corporate Debtor’s (Embassy’s) plea that the application was barred by Section 7,” the NCLAT stated in its 43-page ruling.
In February 2010, Canara Bank had sanctioned a ₹100 crore term loan to the principal borrower, Indiabulls Realtech (now Simar Thermal Power), for which a corporate guarantee was provided by India Bulls Real Estate (now Embassy Development).
The loan account was classified as a non-performing asset (NPA) on September 28, 2017. Canara Bank issued a recall notice to the borrower in September 2020 and invoked the corporate guarantee on June 30, 2010.
In 2025, Canara Bank filed an application under Section 7 of the IBC against the corporate debtor, claiming ₹202.03 crore.
“The date September 28, 2017, relied upon by the Adjudicating Authority for Section 10A is completely incorrect,” the NCLAT asserted, noting that this date pertains to the NPA declaration and is unrelated to the corporate debtor’s default.
“Therefore, we conclude that the application was clearly barred by Section 10A,” the tribunal concluded.
The NCLAT also criticized Canara Bank for hastily filing the petition without reviewing the Deed of Guarantee or other relevant documents, stating, “The Financial Creditor rushed to file the Section 7 application without examining the Deed of Guarantee and other pertinent facts, which is disapproved.”
The NCLAT further noted that none of the Deeds of Undertaking implies any obligation on the part of the Corporate Debtor to settle the financial liabilities of the principal borrower to its lenders.
