News: NCLAT Quashes Insolvency Order Against Embassy Development-04-05-2026
The National Company Law Appellate Tribunal (NCLAT) has set aside an order of the National Company Law Tribunal (NCLT) that had admitted realty firm Embassy Development into insolvency, PTI reported from New Delhi on May 4.
The NCLT’s Delhi bench had in December 2025 directed that insolvency proceedings be started on a plea by Canara Bank. The bank alleged that Embassy Development owed Rs 200 crore as corporate guarantor for a loan to Indiabulls Realtech (now Simar Thermal Power). Rajesh Kaimal, a member of the company’s suspended board, challenged the order.
In its 43-page order, the appellate tribunal held that the alleged default fell "within 10A period" of the Insolvency & Bankruptcy Code (IBC). Section 10A bars insolvency proceedings for any default arising on or after March 25, 2020, for one year, and was inserted to help companies after the COVID-19 lockdowns.
Canara Bank sanctioned a Rs 100 crore term loan to Indiabulls Realtech in February 2010, guaranteed by India Bulls Real Estate (Equinox Development, now Embassy Development). The account became a non-performing asset on September 28, 2017. In September 2020, the bank issued a recall notice to the borrower and invoked the corporate guarantee on June 30, 2010. In 2025 it filed a Section 7 application claiming Rs 202.03 crore.
The NCLAT called the NCLT’s reliance on September 28, 2017 "wholly erroneous", since that date concerned the borrower’s NPA status and not default by the guarantor. It held the application was clearly barred by Section 10A.
It also disapproved of the public sector lender rushing to file the petition in a casual and callous manner without examining the Deed of Guarantee, and said none of the Deeds of Undertaking amounted to a promise by Embassy to discharge the borrower’s liability.
