01Facts
The Corporate Debtor (CD), Vatika Limited, issued 1,460 Non-Convertible Debentures (NCDs) worth ₹146 crore to the Respondent in 2017 to fund a project on 12.212 acres in Gurgaon
¶ 2(ii), 41While the redemption date for the principal was extended to 30.06.2024, the CD defaulted on quarterly interest payments starting March 2022
¶ 2(iv), 5On 29.12.2023, the Respondent issued a notice demanding ₹29.72 crore in overdue interest
¶ 2(vii)Upon non-payment, a Section 7 application was filed on 24.01.2024, claiming a default of ₹274.13 crore (including the principal amount not yet due)
¶ 2(vii), 19During the pendency of the application, the CD paid ₹37.2 crore
¶ 2(ix)The Adjudicating Authority (NCLT) admitted the application on 03.02.2026, initiating Corporate Insolvency Resolution Process (CIRP) against the entire company, rejecting the plea to confine CIRP to the specific project
¶ 2(xi), 16The Appellant, a suspended director, challenged this order.
02Issues
i.1. Whether the Respondent was entitled to claim the principal amount of ₹146 crore as "in default" when the redemption date was 30.06.2024?
¶ 7(I)ii.2. Whether the payment of ₹37.2 crore during the pendency of the Section 7 application cured the default?
¶ 7(III)iii.3. Whether the CIRP should be confined to the specific real estate project ("Project Aspirations") rather than the entire Corporate Debtor?
¶ 7(IV) & (VI)03Law Applied
The court applied Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, regarding the initiation of CIRP upon proof of debt and default
¶ 21Supreme Court’s ruling in Mansi Brar Fernandes v. Shubha Sharma [2025 SCC OnLine SC 1972], which established that real estate insolvency should, as a rule, proceed on a project-specific basis to protect solvent projects and homebuyers
¶ 28NCLAT precedents in Flat Buyers Association Winter Hills – 77, Gurgaon v. Umang Realtech P. Ltd. [2020 SCC OnLine NCLAT 1199] and Gagan Tandon & Ors. v. IL&FS Financial Services Ltd. [2026 SCC OnLine NCLAT 16], which permit "project-wise insolvency" to prevent collateral prejudice to unrelated stakeholders
¶ 32, 3404Reasoning
The Tribunal found that while the principal amount was not due until June 2024, a clear default existed regarding interest payments exceeding the ₹1 crore threshold at the time of filing
¶ 19-20The subsequent payment of ₹37.2 crore did not liquidate the entire default or "cure" the statutory triggers of Section 7
¶ 20The Tribunal held that the NCLT erred in law by refusing project-wise insolvency
¶ 35By examining the Debenture Trust Deed (DTD), the Tribunal noted that the finance was project-specific, secured by the land in Sector 88B (later registered as "Project Aspirations"), and governed by project-linked Escrow accounts and monitoring committees
¶ 48, 51, 63Following the "balanced judicial approach" mandated by the Supreme Court, the Tribunal reasoned that engulfing all 58 projects of the CD—most of which were unrelated to the Respondent’s debt—would cause irreparable prejudice to thousands of homebuyers and other stakeholders
¶ 4, 33, 6405Holding
The Tribunal upheld the initiation of CIRP as debt and default were proven
¶ 65(i)the Tribunal... modified the NCLT’s order to confine the CIRP strictly to "Project Aspirations" (the 12.212-acre project in Sector 88B, Gurgaon)
¶ 65(i)The IRP was directed to revise the public announcement to limit claims to this specific project, while creditors of other projects were granted liberty to pursue independent legal remedies
¶ 65(ii)-(iv)The appeal was disposed of with these modifications
¶ 65Original Court PDF
Surender Singh Suspended Director Of Vatika LimitedvsIdbi Trusteeship Services Limited & Ors.
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