Same transaction, same facts, same bench, different orders: NCLAT pulls up NCLT

The National Company Law Appellate Tribunal (NCLAT) recently set aside the admission of insolvency proceedings against Equinox India Developments Limited, now known as Embassy Developments Limited, in a case filed by Canara Bank. (Rajesh Kaimal v. Prabhat Ranjan Singh)

A coram of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra allowed an appeal filed by Rajesh Kaimal, suspended director of the corporate debtor, against a December 9, 2025 order of the National Company Law Tribunal (NCLT), New Delhi.

The Appellate Tribunal flagged that the same NCLT Bench had passed divergent orders in two Canara Bank petitions arising from the same loan transaction. It noted that NCLT had admitted Canara Bank’s Section 7 petition against Embassy Developments on December 9, 2025, while dismissing another Section 7 petition filed by the bank against RattanIndia Enterprises Limited, another corporate guarantor, on the same day.

Both petitions arose from the same credit facilities advanced for the power project of Indiabulls Realtech Limited, now Sinnar Thermal Power Limited, and the same recall notice dated September 30, 2020.

Both orders were passed by a coram of Judicial Member Mani Sankariah Shanmugasundaram and Technical Member Atul Chaturvedi.

“Giving two divergent judgments by the same Bench on the same date is unexplainable and un-understandable,” the NCLAT said.

Embassy Developments’ predecessor, Indiabulls Real Estate Limited, had executed a corporate guarantee in 2010. The company’s case was that this guarantee was not for repayment of the borrower’s loan, but only for timely infusion of equity into the project and for meeting cost overruns.

In 2016, a cost overrun undertaking was also executed. Under this undertaking, certain promoter entities were required to bring in further equity or funds to meet cost overruns in the project.

Embassy Developments’ predecessor was required to make good the shortfall only if those entities failed to meet their obligations. Its obligation was therefore linked to funding cost overruns, not repayment of the borrower’s debt.

Canara Bank invoked the guarantee through a recall notice dated September 30, 2020 and demanded payment of ₹202.03 crore from the principal borrower and corporate guarantors.

The NCLT admitted the company to insolvency resolution process. It held that the corporate guarantee relied on by Canara Bank did not make Embassy Developments liable to repay the borrower’s debt.

The tribunal also held that the cost overrun undertaking did not help Canara Bank’s case, since it too did not oblige the company to discharge the financial obligations of the principal borrower.

The NCLAT was critical of the NCLT for admitting the insolvency petition without properly examining the guarantee deeds.

“The order passed by the Adjudicating Authority shows complete non-application of mind,” it held.

On Section 10A, the Appellate Tribunal held that default by a corporate guarantor arises only when the guarantee is invoked. Since Canara Bank invoked the guarantee on September 30, 2020 and gave three days for payment, the alleged default arose on October 4, 2020, within the Section 10A period.

“The date i.e. 28.09.2017 taken by the Adjudicating Authority for purposes of Section 10A is wholly erroneous,” the tribunal said.

It thus allowed the appeal.

Suspended director of Embassy was represented by Senior Advocates Rakesh Dwivedi, Arun Kathpalia and Abhijeet Sinha with Advocate Sumesh Dhawan along with a team from Bahuguna Law Associates comprising Advocates Ritesh Kumar, Siddharth Joshi, Shubham Madaan, Ujjwala Gupta, Eklavya Dwivedi and Mohd Yasir.

Canara Bank was represented by Senior Advocate Abhinav Vashist with Advocates Anju Jain, Hitesh Sachar, Rifat Tohid and Abhilasa.

Advocate Prabhat Ranjan Singh appeared for the resolution professional.

[Read Judgment]