NCLAT Sets Aside Order Initiating Insolvency Against Realty Firm Mahagun, Orders Fresh Adjudication

In a relief to nearly 8,000 homebuyers, the National Company Law Appellate Tribunal (NCLAT) on Thursday set aside an order initiating insolvency against the Noida-based realty firm Mahagun (India) Pvt. Ltd., directing the adjudicating authority to reconsider the matter afresh.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra noted that the National Company Law Tribunal (NCLT), New Delhi, had failed to consider that the default was limited to a single project while ordering insolvency against the entire company. The tribunal observed that the company could not fully place facts about its multiple projects before the NCLT earlier.

In light of the Supreme Court precedents mandating project-based resolution for real estate projects, the tribunal observed, “We are of the view that in view of the law laid down by the Hon'ble Supreme Court in Mansi Brar Fernandes and Indiabulls Asset Reconstruction Co. Ltd., the Adjudicating Authority has to consider the issue as to whether the CIRP be confined to project for which Financial Creditor has advanced finance, or CIRP to continue encompassing all the projects of the CD.”

Mahagun had borrowed funds for its Mahagun Manorialle project by issuing secured, senior, unlisted, redeemable, transferable, non-convertible debentures (NCDs) worth up to Rs. 355 crore in December 2020. These debentures were due for redemption between 31 December 2022 and 31 December 2025.

The company defaulted on repayment of these debentures on 30 September 2023, prompting the lender, IDBI Trusteeship Services Ltd., to issue recall notices in February and April 2024. Subsequently, IDBI filed for insolvency in January 2025, and the NCLT admitted the petition in August 2025, appointing a resolution professional.

The company had requested more time to file a detailed reply and to highlight that other projects were being serviced with different lenders. However, the tribunal rejected the plea.

Homebuyers and lenders argued that insolvency should only cover the defaulting project. Amit Jain, a company director, said initiating CIRP for all projects would cause immense hardship to other projects and homebuyers. Aditya Birla Capital, financing other projects, highlighted that no default in repayment has occurred” on their loans and requested these projects be excluded.

The NCLAT set aside the earlier order and directed that the petition be reconsidered afresh by the insolvency tribunal. It gave Mahagun one week to file a detailed reply, while allowing other parties to approach the authority to request a hearing date for the matter. The bench clarified that no further opportunity would be granted to the company to file a reply and that it was for the adjudicating authority to examine and decide the merits of the case.

The tribunal also granted liberty to lenders and homebuyers to file fresh intervention applications, ensuring that the insolvency process considers project-specific defaults and protects homebuyers and solvent projects from unintended consequences.

Case Title: Amit Jain v IDBI Trusteeship

Case Number: Company Appeal (AT) (Insolvency) No. 1186 of 2025

For Appellant:  Senior Advocate Abhijeet Sinha with Advocates Gaurav Mitra, Gaurav H. Sethi, Anmol Joshi, Rahul Kapoor and Rahul Panwar for Amit Jain; Advocate Ashim Sood, Varun Kalra and Ekansh Gupta for Aditya Birla Capital

For Respondents:  Senior Advocate Krishnendu Dutta with Advocates Somdutta Bhattacharya, Kiran Sharma and Niharika Sharma for IDBI; Advocates Malak Bhatt, Neeha Nagpal, Saahil Bahety and Ms. Somya Saxena, Advocates for RP; Advocates Sumesh Dhawan, Aman Sharma and Shaurya, Advocates for Homebuyers; Advocates Gaurav Rana, Ajitesh Kumar, Shivanshu Srivastava also for IDBI Advocate Adhish Srivastava for IDBI in another IA; Advocates Sujoy Datta and Jasjeet Singh and Shubham Raghuwanshi for IDBI in another IA; Advocates Harsha Gollamudi, Varad Dwevedi, and Pratima Singh, Advocates for one of the intervenors; Senior Advocate Gopal Jain with Advocates Sanjeev Singh, Anish Gupta and Sandipa Bhattacharjee for Manorialle Social Welfare Society

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