NEW DELHI: In a significant development for the real estate firm Mahagun, the National Company Law Appellate Tribunal (NCLAT) has annulled the insolvency proceedings against it and instructed the NCLT to reconsider the petition in light of a new status report relating to the projects.
A two-member bench of the appellate tribunal noted that the NCLT had overlooked crucial guidelines from the Supreme Court’s ruling in the Mansi Brar Fernandes case, which stipulates that insolvency proceedings for real estate should be project-specific.
Additionally, the NCLAT acknowledged an intervention request from various homebuyers associated with different Mahagun projects, seeking to overturn the NCLT’s insolvency ruling against the company. Some homebuyers advocated for the continuation of the Corporate Insolvency Resolution Process (CIRP), while a group argued that it should be limited only to the Mahagun Manorialle project.
In this context, Aditya Birla Capital Ltd (ABCL) also submitted an intervention, stating it had provided financing for four other active projects of Mahagun, and that no defaults have occurred.
On August 5, 2025, the Delhi-based NCLT had approved the insolvency application filed by IDBI Trusteeship Services Ltd against Mahagun, citing a default of ₹256.48 crore concerning debenture redemptions. This decision was contested by a member of Mahagun’s suspended board before the appellate tribunal.
Taking all submissions into account, the NCLAT remarked: “The order dated August 5, 2025, is annulled, and petition IB112(ND)/2025 is revived for fresh consideration by the Adjudicating Authority.”
The NCLAT granted Mahagun India one week to submit a detailed response to the insolvency application filed under Section 7 of the IBC, alongside the new status report.
The order further permits both parties to present this ruling to the Adjudicating Authority (NCLT) and to request a hearing date for the Section 7 petition after two weeks. No additional opportunity for the corporate debtor (CD) to file a reply will be permitted, as stated in the 39-page NCLAT order issued on Thursday.
The NCLAT bench, including Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra, also allowed Aditya Birla Capital Ltd to submit a fresh intervention application in the Section 7 petition, which should be considered and decided by the Adjudicating Authority according to legal standards.
ABCL serves as the financial creditor for four real estate and commercial projects in Delhi and NCR: Mahagun Metro Mall, Hotel Sarovar Portico, Mahagun Montage, and Hotel Park Plaza, all mortgaged to it by the firm.
The NCLAT provided similar relief for homebuyers, allowing those who filed interventions in these appeals to submit applications before the NCLT, which should be duly considered.
The appellate tribunal clarified it has “not expressed any views on the merits of the Section 7 petition and intervention applications,” affirming it is the responsibility of the Adjudicating Authority to make these determinations.
Mahagun defaulted on debenture redemptions on September 30, 2023. IDBI Trusteeship Services issued default notices on February 20 and April 17, 2024, subsequently seeking NCLT intervention for a CIRP initiation due to the ₹256.48 crore default.
Mahagun contested the maintainability of the IDBI Trusteeship plea, requesting more time for a detailed response, which the NCLT denied, leading to an order with the provision for written submissions while reserving the right to arguments.
On August 4, 2025, Mahagun sought postponement of the judgment, indicating over 6,000 homebuyers involved in other projects. It argued a two-week extension would facilitate a settlement process, negating the need for a judgment.
However, the NCLT admitted the insolvency application against Mahagun and appointed an Interim Resolution Professional, suspending the company’s board. The NCLT determined that Mahagun did not deny the debt, and existing records indicated the default, thus warranting admission of the petition.
This ruling was subsequently challenged by Amit Jain, a director from the suspended board, leading to the NCLAT’s reversal of the order.
