NCLAT sets aside Insolvency Proceedings against Adity Birla capital, aligning with Supreme Court's Protection of Homebuyers [Read Order]
The Tribunal clarified that it was not expressing any opinion on the merits of the Section 7 petition or the defense to be taken by the Corporate Debtor, leaving these matters to be decided by the Adjudicating Authority in accordance with law
Adity Birla capital
Adity Birla capital
The National Company Law Appellate Tribunal (Principal Bench, New Delhi) has set aside the National Company Law Tribunal's order admitting a Corporate Insolvency Resolution Process (CIRP) against the entirety of Mahagun (India) Pvt. Ltd., directing that the proceedings be reconsidered with a view to confining them only to the defaulting "Mahagun Manorialle" project.
The order came in a batch of interconnected appeals filed by the suspended director of Mahagun (India) Pvt. Ltd., Manorialle Social Welfare Society representing homebuyers, and Aditya Birla Capital Ltd., a secured creditor for other projects of the company. The appeals challenged the NCLT's order dated 05.08.2025, which had admitted a Section 7 petition filed by IDBI Trusteeship Services Ltd. for default on debentures worth ₹256.48 crores.
The Tribunal noted that Mahagun (India) Pvt. Ltd. is a real estate company engaged in multiple projects across NCR, including Mahagun Manorialle, Mahagun Mywoods, Mahagun Montage, Mahagun Metro Mall, and Hotel Sarovar Portico. The debenture default was specific to the Mahagun Manorialle project, while other projects had different lenders and were performing without defaults.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Amit Jain
The NCLAT relied on the Supreme Court's recent judgment in Mansi Brar Fernandes vs. Shubha Sharma, which emphasized that the "right to shelter" is a fundamental right and that insolvency proceedings for real estate companies should, as a rule, proceed on a project-specific basis rather than against the entire corporate debtor. This approach protects solvent projects and genuine homebuyers from collateral prejudice.
The bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) observed that initiating CIRP against the entire company would adversely affect more than 8,000 homebuyers across various projects who were not at fault and would jeopardize the objective of value maximization of assets. It noted that different projects had distinct ownership and separate sets of lenders.
Accordingly, the NCLAT set aside the NCLT's admission order and revived the Section 7 petition for fresh consideration. It granted Mahagun (India) Pvt. Ltd. one week's time to file a detailed reply to the Section 7 petition along with a status report of all its projects. The Tribunal also granted liberty to Aditya Birla Capital Ltd. and other homebuyers to file intervention applications before the NCLT.
The Tribunal clarified that it was not expressing any opinion on the merits of the Section 7 petition or the defense to be taken by the CorporateDebtor, leaving these matters to be decided by the Adjudicating Authority in accordance with law.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
