Surender Singh Suspended Director Of ... vs Idbi Trusteeship Services Limited

[Arising out of Order dated 03.02.2026 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench, Court - I, Chandigarh), in C.P. (IB) No. 45/Chd/Hry/2024]

IN THE MATTER OF: Surender Singh Suspended Director of Vatika Limited ...Appellant Versus IDBI Trusteeship Services Ltd. & Anr. ...Respondents

Present: For Appellant : Mr. Kapil Sibbal, Mr. Virender Ganda & Mr. Arun Kathpalia, Sr. Advocates with Mr. Vishal Ganda, Mr. Ayandeb Mitra, Ms. Manisha Singh, Ms. Diksha and Ms. Riya Palnitkar, Advocates.

For Respondent : Mr. Gopal Jain, Mr. Nalin Kohli & Mr. Abhijeet Sinha, Sr. Advocates with Ms. Meghna Mishra, Mr. Nikhil Ratti Kapoor, Yashodhara Gupta, Mr. Kevin Chadha and Mr. Saikat Sarkar, Advocates for R-1.

Mr. Gaurav Mitra and Mr. Adhish Srivastava, Advocates for RP.

Mr. Rudreshwar Singh Sr. Advocate with Mr. Eklavya Dwivedi, Advocates for Omkara Assets.

Mr. Akshay Srivastava, Mr. Vivek Kumar and Ms. Raveena Paniker, Advocates for Interveners.

Mr. Aditya Rathi, Advocate.

Mr. Sumesh Dhawan, Mr. Kartik Nayar and Mr. Divyansh Rai, Advocates for Intervener. JUDGMENT

ASHOK BHUSHAN, J.

This appeal has been filed by a suspended director of the corporate

debtor, Vatika Limited challenging the order dated 03.02.2026 passed by the

adjudicating authority (National Company Law Tribunal, Chandigarh Bench,

Court I, Chandigarh) admitting a Section 7 application filed by the IDBI

Trusteeship Services Limited, respondent No. 1 herein. Aggrieved by the order

of the adjudicating authority initiating Corporate Insolvency Resolution

Process (CIRP) against the corporate debtor appointing an Interim Resolution

Professional (IRP) and imposing moratorium, this appeal has been filed.

2. Brief background facts of the case necessary to be noticed for deciding

the appeal are:

i. The corporate debtor, Vatika Limited is a company engaged in the

business of Real Estate Development. The corporate debtor is

developing multiple residential and commercial projects across the

state of Haryana and National Capital Territory Region.

ii. On 30.06.2017, corporate debtor entered into Debenture Trust Deed

(DTD) with IDBI Trusteeship Limited (Debenture Trustee) acting as a

Debenture Trustee on behalf of the Indiabulls India Opportunities Fund

and Indiabulls High Yield Fund for the issuance of 1,460 fully secured

renewable and Non-Convertible Debentures having a value aggregating

to total of ₹146 crore.

Comp. App. (AT) (Ins.) Nos. 266 of 2026 2 of 58 iii. The issuance of debenture was protected by various securities provided

by the corporate debtor, including mortgage over the project land,

assignment of receivables, Escrow Account for project, revenue and

other securities. Term of the debenture was for 48 months from the

investment date until 30.06.2021.

iv. By first Amendment of DTD dated 28.06.2021 term of the debenture

was extended till 30.06.2022. On corporate debtor's last request being

on 26.06.2023, respondent vide letter dated 27.06.2023, granted

extension of redemption date till 30.06.2024.

v. On 01.09.2023, IDBI Trusteeship issued a notice seeking payment of

₹24,26,61,821/- along with an additional coupon @ 5% per annum

within 15 days from the receipt of the notice.

vi. On 09.10.2023, the corporate debtor prayed for No-Objection

Certificate (NoC) for sale of various units in the 'Project Aspirations'.

The IDBI Trusteeship vide letter dated 30.10.2023, granted no objection

to sale of various plots in 'Project Aspirations', Gurgaon.

vii. On 29.12.2023, another notice was issued by Debenture Trustee

seeking payment of ₹29,72,29,959/- along with the additional coupon

@ 5% per annum within 15 days from the receipt of the said notice. No

payment having been received from the corporate debtor that

Debenture Trustee filed an application on 24.01.2024 under Section 7,

claiming amount of default of ₹274,13,45,241/-.

Comp. App. (AT) (Ins.) Nos. 266 of 2026 3 of 58 viii. Date of default was mentioned as 15.06.2022. Notice was issued under

Section 7 application. Reply was filed by the corporate debtor raising

various objections to the Section 7 application. It was pleaded that by

consent extension for repayment of debenture was on 30.06.2024,

whereas application under Section 7 has been filed on 24.01.2024,

which is prior to date of redemption to debentures.

ix. It was pleaded that request for 57 NoC was made on 22.05.2024, but

not a single NoC was received which resulted in loss of revenue. After

filing of Section 7 application and up to the date of filing of reply an

amount of ₹37.2 crore have been paid. The claim of alleged amount

₹274 crore in Section 7 application is denied which amount is not due.

x. It was pleaded that proceedings initiated by IDBI Trusteeship is a

recovery proceeding.

xi. Adjudicating authority heard the parties and by impugned order dated

03.02.2026 has admitted Section 7 application.

xii. Adjudicating authority in the impugned order held that default has

been committed by the corporate debtor. Non-issuance of NoC by

financial creditor cannot dilute or extinguish the statutory

consequences flowing from the default. It was held that failure to pay

interest due from 15.06.2022 onwards constitute a contractually

recognised event of default under Clause 19 of the Trust Deed and

extension of final maturity date for the principal does not ipso facto

grant a moratorium on accrued and future interest obligations.

Comp. App. (AT) (Ins.) Nos. 266 of 2026 4 of 58 xiii. The pleas raised by the corporate debtor to confine the CIRP project-

wise was rejected, holding that Insolvency & Bankruptcy Code

recognises insolvency of the corporate debtor and not of an individual

project. It was held that Code provides for project-wise resolution and

not for project-wise insolvency. Adjudicating authority admitted

Section 7 application, imposed moratorium and appointed IRP.

3. We have heard, learned Sr. counsels Mr. Kapil Sibbal, Mr. Virender

Ganda and Mr. Arun Kathpalia appearing for the appellants and learned Sr.

counsels, Mr. Gopal Jain, Mr. Nalin Kohli and Mr. Abhijeet Sinha appearing

for the R-1. Learned counsel, Mr. Gaurav Mitra has appeared for the

Resolution Professional (RP). We have also heard learned Sr. counsel. Mr

Sanjeev Sen appearing for the respondent/homebuyers as well as learned

counsel for the interveners.

4. Learned counsel for the appellant in support of the appeal submitted

that alleged default of ₹29.72 crore which amount was claimed in the notice

dated 29.12.2023 was cured during pendency of Section 7 application. The

corporate debtor has made a payment of ₹37.70 crore to the financial creditor,

hence it effectively cleared all dues. The adjudicating authority ought not to

have admitted Section 7 application. It is submitted that the payment of

debentures was due only on 30.06.2024, by virtue of extension granted by R-

1 vide letter dated 27.06.2023. Thus, principal amount on debenture was not

due. In the notice issued by R-1 amount claimed was only ₹29,72,29,957/-

and no other amount was claimed in the notice, even if event of default was

committed in not making payment within 15 days as per notice dated Comp. App. (AT) (Ins.) Nos. 266 of 2026 5 of 58 29.12.2029. Only amount due on date when Section 7 application was filed

was the amount of ₹29,72,29,959/-. The principal amount under the

debentures was no due, it being payable only on 30.06.2024 and no notice

within meaning of Clause 19.2 of the Debenture Trust Deed was issued

recalling the payment under debentures. The amount claimed in default

under Part IV of Section 7 application i.e., amount of ₹274,13,45,241/- was

wholly incorrect and baseless. Amount claimed in Part IV being not due, the

application under Section 7 deserves to be rejected on this ground alone. It

is submitted by learned counsel for the appellant that DTD dated 30.06.2017,

by which amount of ₹146 crore was raised by the corporate debtor was with

respect to specified project and identified property, which are detailed in the

DTD. Debenture security under the DTD were pertained to the project and

the property. Sale proceeds from the project were to be deposited in the

Escrow Account. DTD specified that prior to sale of any unit in the project,

the no objection from the Debenture Trustee were required. Under DTD, the

Debenture Holder had right to appoint the Project Management Consultant

as well as an internal auditor. Various clauses of DTD clearly provided that

amount disbursed was in relation to the project and the property. In event

CIRP, if initiated ought to have been confined to the project in question, which

project was subsequently registered with RERA as aspirations in 2022. At

the time when amount was raised by debentures, property was specified,

project was neither registered nor named which project came to be registered

as aspirations, all details of registration project, issuance of license by

Department of Town and Country Planning (DTCP) of Haryana were shared

Comp. App. (AT) (Ins.) Nos. 266 of 2026 6 of 58 with the financial creditor. Financial creditor has issued NoC for sale of units

in 'Project Aspirations' thus was also well aware it is of 'Project Aspirations'

which is subject matter of the debentures. Adjudicating authority committed

error in holding that IBC does not contemplate project-wise insolvency.

Judgement of the Hon'ble Supreme Court in 'Mansi Brar Fernandes' Vs.

'Shubha Sharma & Anr.' reported in [2025 SCC OnLine SC 1972], and 2

judgements of this Tribunal in 'Flat Buyers Association Winter Hills - 77,

Gurgaon' Vs. 'Umang Realtech P. Ltd. & Ors.' reported in [2020 SCC

OnLine NCLAT 1199], and 'Amit Jain (Suspended Directors of Mahagun

(India) Pvt. Ltd.)' Vs. 'IDBI Trusteeship Services Ltd. & Anr.' reported in

[2025 SCC OnLine NCLAT 1753], were relied to support the submission of

project-wise resolution, without even adverting to the said judgements, the

Tribunal came to conclusion that project-wise insolvency is not contemplated

and statutory scheme under IBC is only for project-wise resolution. Certain

clauses of the Trust Deed were also referred to by the adjudicating authority

for rejecting the plea of project-wise resolution. The view of the adjudicating

authority that no project-wise insolvency is permissible is contrary to the

judgements of this Tribunal. Learned counsel for the appellant has relied on

the recent judgement of this Tribunal in 'Gagan Tandon & Ors.' Vs. 'IL&FS

Financial Services Ltd. & Ors.' reported in [2026 SCC OnLine NCLAT 16],

where this Tribunal has reiterated the law pertaining to Real Estate Company

with regard to project-wise resolution, which judgement fully covers the

issues raised in the present appeal. It is submitted that had the Section 7

application initiated for correct amount due against the corporate debtor,

Comp. App. (AT) (Ins.) Nos. 266 of 2026 7 of 58 corporate debtor would have discharged the said debt but due to incorrect

and inflated amount claimed in Section 7 application, the corporate debtor

was put to prejudice and great loss. The corporate debtor is carrying various

projects in state of Haryana and National Capital Region, the respondent is

only lender of the project in question. There are 58 projects spanning over

various cities, in Northern India and 50 ongoing projects at Gurgaon itself,

putting all the projects in insolvency, with respect to which lender has no

concern will cause great prejudice to stakeholders of different projects,

including the homebuyers. It is further submitted that in pursuance of liberty

granted by this Tribunal on 06.02.2026, on 25.02.2026, the appellant has

submitted a proposal to the financial creditor to liquidate the entire amount

claimed under Part IV, which offer was rejected by the financial creditor,

which clearly indicates its intention to endeavour to misuse the IBC and take

control of entire corporate debtor, which included 58 projects and assets

worth ₹18,000 crores. It is submitted that this Tribunal may exercise its

jurisdiction under Rule 11 of the NCLAT Rules, 2016 and close the CIRP in

the facts of the present case and permit the appellant to liquidate the entire

amount in fazed manner as suggested by the appellant.

5. Learned counsel for the respondent refuting the submissions of the

counsel for the appellant submits that in the present case, debt and default

has been fully proved. With effect from 15.03.2022, the corporate debtor has

failed to make quarterly payments of coupon interest. Notice dated

29.12.2023 was issued demanding the payment of ₹29,72,29,959/- towards

interest payment within 15 days. Amount having not been paid an event of

Comp. App. (AT) (Ins.) Nos. 266 of 2026 8 of 58 default has been committed under Clause 19 of the DTD, which lead the

financial creditor to file Section 7 application on 24.01.2024. The submission

of the appellant that amount of ₹274,13,45,241/- was not due is incorrect.

By virtue of Clause 19.2(b) of the DTD, the entire amount under the debenture

becomes due, hence financial creditor has rightly claimed the amount in

default as ₹274,13,45,241/-. The submission of the appellant that by

payment of ₹37.2 crore during pendency of the Section 7 application, entire

default has extinguished is incorrect. The amount paid during pendency of

Section 7 application was not even able to clear the quarterly interest default.

The default continues and adjudicating authority has rightly admitted Section

7 application. Supporting the order of the adjudicating authority, rejecting

the plea of project-wise resolution, it is submitted that law does not

contemplate project-wise insolvency, but only project-wise resolution, which

question need to be considered by RP and the Committee of Creditors (CoC)

in the CIRP. It is falsely portrayed that project defined in DTD is 'Project

Aspirations'. 'Project Aspirations' came to be registered only in the year 2022,

hence it cannot be accepted that funds were extended to the corporate debtor

in 2017 for the project in question. It is submitted that RERA registration of

'Project Aspirations' has also expired. It is submitted that Clause 8.3 of DTD

contemplate that corporate debtor shall utilise the subscription amount to

meet on going requirement of funds for business activities and general

corporate purpose, hence the amount of debenture was for corporate purpose

and not confined to any project. Judgement of this Tribunal in 'Gagan

Tandon & Ors.' (supra), is not applicable. There are various distinguishing

Comp. App. (AT) (Ins.) Nos. 266 of 2026 9 of 58 features in the present case from the case of Gagan Tandon. It is submitted

that there was no obligation on the financial creditor to issue NoC. It is

submitted that it was an obligation of the corporate debtor to make the

payment of coupon interest, irrespective of the availability of the cash flow in

the Escrow Account. The requirement seeking prior permission before sale of

project unit is the covenant binding on the corporate debtor is with intention

to protect the debenture security created in favour of the Debenture Holders.

Issuance of NoC was contingent upon servicing of interest payment, when

corporate debtor defaulted in payment of interest, there was no obligation to

issue NoC for sale of units. Debt and default having been proved, as per the

law laid down by the Hon'ble Supreme Court, the adjudicating authority had

no option except to admit Section 7 application. Appellants are not entitled

for any relief in this appeal.

6. Learned counsel appearing for the homebuyers/respondents No. 3 to 6

submits that they have already filed a Section 65 application for seeking a

declaration that Section 7 proceedings have been initiated fraudulently and

with malicious intent, which application has been rejected, which is

separately challenged. An I.A. No.1162/2026 has been filed by M/s. Omkara

Asset Reconstruction Private Ltd. praying for impleadment and dismissal of

company petition, applicant is also creditor of the corporate debtor vide

Assignment Agreement dated 28.12.2024. I.A. No.1134/2026 has been filed

by Scaler Ventures Business Solutions Private Limited praying for

intervention in the appeal. Appellant claimed to be financial creditor in a

Comp. App. (AT) (Ins.) Nos. 266 of 2026 10 of 58 class, corporate debtor entered into an Agreement to Sell dated 17.01.2024,

for sale of 165 plots situated in Project Vatika Limited next to.

7. From the submissions of counsel for the parties and materials on the

record, following are the questions which arise for consideration:

I. Whether the default by the corporate debtor was for the amount of

₹29,72,29,959/- as claimed in notice dated 29.12.2023 or financial

creditor was entitled to claim the entire amount, including principal

amount of debentures in Part IV i.e., of ₹274 crore?

II. Whether financial creditor has been able to prove debt and default on

part of corporate debtor?

III. Whether due to payment of ₹37.2 crore during pendency of Section 7

application before the NCLT, default by corporate debtor stood cured?

IV. Whether view of the adjudicating authority that insolvency cannot be

project-wise in case of Real Estate Company and only resolution can be

done project-wise is correct in law?

V. Whether DTD dated 30.06.2017, contemplated payment of amount for

a project against a property and what were the security under the DTD?

VI. Whether in the facts of the case, CIRP is liable to continue against the

corporate debtor as a whole or confine to the project contemplated

under the DTD?

VII. Relief, if any to which, appellant is entitled?

Question Nos. (I), (II) & (III):

Comp. App. (AT) (Ins.) Nos. 266 of 2026 11 of 58

8. All these questions being interconnected are taken together.

9. The DTD dated 30.06.2017 contemplated as per Schedule IX of the DTD

dealing with terms and debentures, the Debenture Holders were entitled to

receive an interest at a coupon rate of 11.30% per annum, compounded

monthly and payable quarterly. The term of debenture was 48 months i.e.,

30.06.2021. Paragraphs 2 & 3.1 of the Schedule IX is as follows:

"2. Term The term of the Debentures shall be 48 (forty eight) months from the Investment Date until 30 June, 2021 ("Outer Date").

3.1 From and including the dare of disbursement (the 'Investment Date'), the Debenture Holders shall be entitled to receive an interest at a coupon rate of 11.39% (Eleven point three nine percent) per annum compounded monthly ("Coupon") which shall be payable quarterly and shall accrue as per dates mentioned in the Repayment Schedule ("Interest Due Date"), provided however that:

(a) The interest shall be payable Irrespective of the availability of cash flows in the Escrow Accounts, provided however the unpaid interest shall accrue and be payable per paragraph 3.2 below.

(b) In the event the Company pays the interest prior to any Interest Due Date ("Interest Payment Date"), such interest will be deemed to have been accrued on the date of such payment."

10. The period of debenture was extended by first amendment to the

debenture on 28.06.2021 and thereafter further extension were granted in the

tenure of the debenture, last extension was granted on 27.06.2023 issued by

R-1 under which the principal amount of debenture of ₹146 crore was payable

on 30.06.2024. Letter dated 27.06.2023 issued by R-1 to the corporate

debtor, which letter was part of Section 7 application filed as Annexure A-20

Comp. App. (AT) (Ins.) Nos. 266 of 2026 12 of 58 to the Section 7 application. Thus, the principal amount was payable only on

30.06.2024. Letter dated 27.06.2023, issued by R-1 is as follows:

"Date: June 27, 2023 To, IDBI Trusteeship Services Ltd.

Asian Building GF 17 Kamani Marg.

Ballard Estate, Mumbai 400001.

Dear Sir, Subject; Non-convertible debentures aggregating to Rs.146,00,00,000/· (Rupees One Hundred Forty Six Crore only) issued by Vatika Limited ("Company") We refer to Non-convertible debentures aggregating to Rs.146,00,00,000/- (Rupees One Hundred Forty Six Crore only) issued by Vatika Limited ("Company") issued by Vatika Limited and subscribed aggregating to to Rs.146,00,00,000/- (Rupees One Hundred Forty Six Crore only) by India bulls High Yield Fund and lndiabulls India Opportunities Fund. In connection to the request received from the Company Vide letter dated 26th June, 2023 and various discussions with their officials regarding extension of redemption date of debentures to 30th June 2024, we hereby confirm to grant our approval for extension of the redemption date to 30th June 2024 and further amend the necessary document in this regard. The Parties hereby agree to delete and replace Clause 5.3 of Schedule IX (Interest Payment Dates/Repayment Schedule) of the Original OTD with the following:

Date Coupon Fixed RP Variable Principal RP Repayment 15-Sep-17 3,54,15,009 - - -

15-Dec-17 4,18,54,101 - - - 15-Mar-18 4,13,94,166 - - - 15-Jun-18 4,23,14,036 - - - 15-Sep-18 4,23,14,036 - - - 15-Dec-18 4,18,54,101 - - - 15-Mar-19 4,13,94,166 - - - 15-Jun-19 4,23,14,036 - - -

Comp. App. (AT) (Ins.) Nos. 266 of 2026 13 of 58 15-Sep-19 4,23,14,036 - - - 15-Dec-19 4,18,54,101 - - - 15-Mar-20 4,18,54,101 - - - 15-Jun-20 4,23,14,036 - - - 15-Sep-20 4,23,14,036 - - - 15-Dec-20 4,18,54,101 - - - 15-Mar-21 4,13,94,166 - - - 15-Jun-21 4,23,14,036 - - - 15-Sep-21 4,23,14,036 - - - 15-Dec-21 4,18,54,101 - - - 15-Mar-22 4,13,94,166 - - - 15-Jun-22 4,23,14,036 - - - 15-Sep-22 4,23,14,036 - - - 15-Dec-22 4,18,54,101 - - - 15-Mar-23 4,13,94,166 - - - 15-Jun-23 4,23,14,036 - - - 15-Sep-23 4,23,14,036 - - - 15-Dec-23 4,18,54,101 - - - 15-Mar-24 4,18,54,101 - - - 15-Jun-24 4,23,14,036 - - - 30-Jun-24 68,99,028 46,71,70,000 As per 1,46,00,00,000 Paragraph 5.1 (b) of Original DTD

We confirm that all other terms of the DTD shall remain unchanged and will continue in full force and effect and shall not beam ended without following the procedure for amendment as set out in the DTD, We further confirm that except as expressly stated, nothing contained herein is intended to or shall be construed as waiver of any rights or remedies that a Debenture Holder may have against the Issuer pursuant to the DTD or any other Debenture Documents. Terms capitalized but not defined herein shall have the meaning ascribed to the under the DTD. Yours sincerely For lndiabulls Investment Management Limited"

11. The corporate debtor was, however obliged to make the payment of

interest as per DTD. On 01.09.2023, notice was issued by the Debenture

Trustee calling for payment of ₹24,26,61,821/- within 15 days. The

Comp. App. (AT) (Ins.) Nos. 266 of 2026 14 of 58 Debenture Trustee issued another notice dated 29.12.2023, demanding

payment of ₹29,72,29,959/- within 15 days from receipt of notice, which

notice was basis for Section 7 application. The notice dated 29.12.2023

referred to outstanding interest and the notice directed the corporate debtor

to pay the amount within 15 days from the date of receipt of the notice. The

notice reads as follows:

"COURIER/E-MAIL Ref. No.: 61453/ITSL/OPR/2023-24 Date: December 29, 2023

1. VATIKA LIMITED VATIKA TRIANGLE, 4TH FLOOR SUSHANT LOK, PHASE-1, BLOCK-A MG ROAD, GURUGRAM-122002, HARYANA

2. APLIN DEVELOPERS PVT. LTD.

FLAT NO. 621-A, 6TH FLOOR, DEVIKA TOWERS 6, NEHRU PLACE, NEW DELHI-110019

3. MR. ANIL BHALLA FARM NO 4 HYDE PARK SULTANPUR FARM MEHRAULI, NEW DELHI-110030

4. MR. GAUTAM BHALLA FARM NO 4 HYDE PARK SULTANPUR FARM MEHRAULI, NEW DELHI-110030 EMAIL: anilbhalla@vatikagroup.com gautambhalla@vatikagroup.com nikkhilbhatia@vatikagroup.com surendersingh@vatikagroup.com SUBJECT : Notice under the Debenture Trust Deed and/or the applicable laws for, inter alia, (a) payment of amount(s) under the Debenture Trust Deed and/or (b) sale/transfer/assignment etc. of

Comp. App. (AT) (Ins.) Nos. 266 of 2026

15 of 58 the Security/Securities provided under the Security Documents.

Dear Sir(s), We, IDBI Trusteeship Services Limited, a company incorporated in terms of the Companies Act, 1956 and acting as Debenture Trustee (hereinafter Trustee) for debenture holders of the non-convertible debenture aggregating Rs.146 Crore (Debentures) issued by you, the addressee No. 1 in terms of the Debenture Trust Deed dated 30.06.2017 executed between the Addressees No. 1, 2 and the Trustee issue the following notice to you:

Please note that in terms of the Debenture Trust Deed, quarterly interest amounts (coupons) became due and payable to Indiabulls High Yield Fund and Indiabulls India Opportunities Fund, the debenture holders as per beneficiary position list in the relation to the Debentures as under:

Due Date Outstanding Interest (INR) 15-Mar-2022 28,71,445/-

15-Jun-2022 4,23,14.036/-

15-Sep-2022 4,23,14,036/-

15-Dec-2022 4,18,54,102/-

15-Mar-2023 4,13,94,1667-

15-Jun-2023 4,23,14,036/-

15-Sep-2023 4,23,14,036/-

15-Dec-2023 4,18,54,102/-

Total 29,72,29,959/-

However, you have failed to pay the interest amounts which have become due and payable under Clause 3.1 of the Schedule IX of the Debenture Trust Deed. This entails payment of additional coupon @ 5.00% per annum compounded monthly on the outstanding interest amount from the date of default till the company makes payment of the interest amount in

Comp. App. (AT) (Ins.) Nos. 266 of 2026

16 of 58 terms of Clause 3.2 read with Clause 7.1 of Schedule DX of the Debenture Trust Deed. Accordingly, an event of default has occurred in terms of Clause 19.1 of the Debenture Trust Deed.

As per the terms and conditions of the Debenture Trust Deed, you have 15 calendar dates from the respective due dates to cure the default and make the payment of the interest amounts alongwith additional and/or default interest to the Debenture Holders.

Accordingly, you are called upon to pay above mentioned amounts aggregating INR 29,72,29,959/- (Rupees Twenty Nine Crores Seventy Two Lakhs Twenty Nine Thousand Nine Hundred Fifty Nine). In addition to the said amount, you are also liable to pay additional coupon @ 5.00% per annum on a monthly basis over and above documented interest rate, penalty charges and all applicable charges in terms of the Debenture Trust Deed, computed on the entire outstanding secured obligations with effect from respective dates of default (alongwith further interest till date of payment) within 15 days from the date of receipt of this notice failing which the Debenture Trustee shall be constrained to inter alia enforce the securities (or any part thereof) that have been created to secure the Debentures and enforce all such rights that are available to them under applicable laws. Please note that this notice is without prejudice to and/or without impairing/affecting any of our rights as a Debenture Trustee and/or rights of the Debenture Holder under the Debenture Trust Deed, the Transaction Documents or otherwise.

Any capitalized terms used and not defined herein shall have the same meaning as ascribed to such terms under the Trust Deed and the other Transaction Documents.

Yours sincerely, AUTHORIZED SIGNATORY IDBI TRUSTEESHIP SERVICES LIMITED DEBENTURE TRUSTEE CC: Debenture Holders"

Comp. App. (AT) (Ins.) Nos. 266 of 2026

17 of 58

12. Along with the Section 7 application, the Debenture Trustee has also

placed reliance on NeSL certificate, which certificate mentions, date of

submission as 29.12.2023 and default amount as ₹29,72,29,959/-. Part B of

the NeSL certificate contained following information:

"NATIONAL E-GOVERNANCE SERVICES LIMITED PART B (History of all filing of information received by IU for the same UDI, whether regular debt or default, and the status of authentication by the party) History of submission and Authentication in respect of M/s VATIKA LIMITED (Debtor) Unique Debt Identifier:

TRUST0460D_INE790J07073 Date of Submission 29-12-2023 12:00:43 Type of Submission Default Submission Submission ID 1 Submitted by M/s CREDITOR FRP REP.

(CREDITOR) BY IDBI TRUSTEESHIP SERVICES LTD Debtor M/s VATIKA LIMITED Default Amount 297229959.00 Status of DEEMED TO BE Authentication by AUTHENTICATED Debtor Authentication 14-01-2024 00:06:46" Completed on

13. The application was filed under Section 7 by the Debenture Trustee on

24.01.2024, i.e., immediately after authentication of the above amount of

default of ₹29,72,29,959/-. As noted above, quarterly interest payment was

contemplated by the DTD, the notice dated 29.12.2023 clearly mentions the

details of default of the interest accumulating the amount

of ₹29,72,29,959/-, which amount was also authenticated by NeSL

certificate as relied by the financial creditor itself. Now we come to the Section

Comp. App. (AT) (Ins.) Nos. 266 of 2026 18 of 58 7 application filed by the financial creditor to notice the pleadings and basis

of Section 7 application. In Part IV of the application, at column No. 1 under

the heading "Particulars of Financial Debt" after giving details of DTD,

various securities referring to various clauses of DTD as well as Schedule IX(3)

of Trust Deed, financial creditor has referred to the notice dated 29.12.2023

and referring to the above notice, the financial creditor pleaded that corporate

debtor is in default of ₹274,13,45,241/-. Para U of Part IV, column 1 is as

follows:

"Part - IV

PARTICULARS OF FINANCIAL DEBT

1. TOTAL AMOUNT OF .............

DEBT, DETAILS OF u) Subsequently, TRANSACTIONS ON owing to the ACCOUNT OF WHICH continuous failure of DEBT FELL DUE, AND the Corporate TIIE DATE FROM WHICH Debtor, Corporate SUCH DEBT FELL DUE Guarantor and Personal Guarantors to pay outstanding amounts, the Applicant issued another Demand notice dated December 29, 2023 demanding payment of Rs. 29,72,29,959/- (Rupees Twenty Nine Crores Seventy Two Lakhs Twenty Nine Thousand Nine Hundred and Fifty Nine only) along with. additional coupon@ 5% per annum on a monthly basis over and

Comp. App. (AT) (Ins.) Nos. 266 of 2026 19 of 58 above documented interest rate, penalty charges and all applicable charges in terms of the Trust Deed, within 15 days from the date of receipt of this notice. However, yet again the Corporate Debtor along with the Corporate Guarantor and Personal Guarantors failed to pay the outstanding amounts. True Copy of the Demand Notice dated December 29, 2023, is annexed herewith and marked as Annexure - A/22.

14. Part IV, Item No. 2, which gives a detail of amount claim to be in default

is as follows:

"Part - IV

PARTICULARS OF FINANCIAL DEBT

2. AMOUNT CLAIMED TO Amount in Default:

BE IN DEFAULT AND Rs. 274,13,45,241/-

THE DATE ON WHICH (Rupees Two THE DEFAULT Hundred Seventy- OCCURRED (ATTACH Four Crores Thirteen THE WORKINGS FOR Lakhs Forty-Five COMPUTATION OF Thousand Two AMOUNT AND DAYS OF Hundred Forty only) DEFAULT IN TABULAR which comprises of FORM) the Principal Amount, Interest, Other Charges (Fixed Redemption Premium) and Default Interest.

Comp. App. (AT) (Ins.) Nos. 266 of 2026 20 of 58 A tabulated computation of the amounts due and payable is annexed herewith and marked as Annexure - A/23. The defaults committed by the Corporate Debtor are of a continuing nature. Date of Default: The date of default is June 15, 2022.

15. When we look into Part V, documents annexed with the application were

referred to prove the existence of debt of ₹274,13,45,241/-. As noted above,

Part IV last notice which is referred to in Part IV is notice dated 29.12.2023.

The DTD provides for event of default, in clause 19.2. Clause 19.2 provides

for issuing the notice on occurring the event of default. Clause 19.2 on which

reliance is placed by learned counsel for both the parties, provides as follows:

"19.2 Upon the occurrence of an Event of Default which is capable of being cured, the Debenture Holders may cause the Debenture Trustee to Immediately. Issue a written notice ("Default Notice") requiring the Promoters, the Land Owning Companies and the Company to remedy the Event of Default within the Cure Period. If the Event of Default remains un- remedied after the expiry of the Cure Period the Debenture Holders may, at their sole discretion and option, exercise through the Debenture Trustee, any or all of, or a combination of, the following remedies, notwithstanding the other rights of the Debenture Holders under this Deed:

(a) Terminate the Definitive Agreements in accordance with the terms thereof;

(b) Require the Company to redeem all the outstanding Debentures, within 10 (ten) days of the expiry of the Comp. App. (AT) (Ins.) Nos. 266 of 2026 21 of 58 Cure Period such that the Debenture Holders achieve the Default Redemption Price:

(c) Require the Promoters to purchase all the outstanding Debentures, within 10 (ten) days of the expiry of the Cure Period, such that the Debenture Holders achieve the Default Redemption Price:

(d) Appoint such numbers of Director's on the Board of the Company and the Land Owning Companies as the Investors deem appropriate (Debenture Director(s)"):

Provided that. subject to Applicable Law, the Company, the Land Owning Companies and the Promoters expressly agree and undertake that:

(A) The Debenture Director shall not be liable for any default or failure of the Company or the Land Owning Companies in complying with the provisions of any applicable Law, Including but not limited to, defaults under the Companies Act, taxation and labour Laws of India;

(B) The Debenture Director shall not be identified as an officer in default of the Company or the Land Owning Companies, or occupiers of any premises used by the Company or the Land Owning Companies or employers under applicable Law; and (C) The Articles of Association of the Company and the Land Owning Companies shall provide for indemnification of the all Directors including the Debenture Director. up to the extent permitted under Law. All Directors shall be indemnified, out of the Assets and capital of the Company or the Land Owning Companies against any liability Incurred by the Directors in defending any proceedings, whether civil or criminal, against the Company or the Land Owning Companies.

(e) Exercise their rights under any of the Definitive Agreements including in relation to enforcement of security created under the Definitive Agreements;

(f) Direct the Escrow Agent to:

(I) recognise the Escrow Nominee as the exclusive authorized signatories with respect to the Escrow Accounts;

Comp. App. (AT) (Ins.) Nos. 266 of 2026 22 of 58 (II) Cease making payments of any amounts payable to the Promoters under the Definitive Agreements until the Debentures are rendered in terms thereof, and (III) Cease making payments of any amounts payable in the Company/Land Owning Companies under the Definitive Agreements until the Debentures are redeemed in terms hereof.

(g) Require the Promoters, the Land Owning Companies and the Company to undertake all actions necessary for the Escrow Nominee to be solely authorized to operate the Escrow Accounts;

(h) Direct the Escrow Nominee to deliver written Instructions to the Escrow Agent to deal with the monies lying or to be received in the Escrow Accounts (Including, if necessary as attorney for and in the name of the Company Land Owning Companies), generally in such manner, and upon such terms whatever as the Debenture Holders may consider Fir. Including deliver to the Escrow Agent a written notice instructing the Escrow Agent to make payment of all the amounts received to be received in the Escrow Accounts in the Debenture Holders including to create, break, pre- mature break, liquidate, and appropriate the proceeds of any fixed deposits created out of such amounts in terms of the Escrow Agreement), till such time that the aggregate amounts outstanding to thin Debenture Holders In terms of the Definitive Agreements have been fully recovered by the Debenture Holders:

(i) Require the Debenture Trustee to exercise rights under this Deed, including (illegible) not limited to enter and take possession of the Property, appoint a new developer to develop the Project via joint venture/joint development/development management model, disposition/sale of the entire Project. bulk sale of Project units, sale of FAR/development rights: and/or to enforce any or all of, or s combination of the Security Interest created pursuant to the Definitive Agreements; and/or

(j) Assign all or any of the Debentures and/or any of the respective rights under this Deed, without the prior consent of any Person."

16. Clause 19.3 provides that upon the occurrence of event and default,

which is not capable of being cured, Debenture Holder may cause the

Comp. App. (AT) (Ins.) Nos. 266 of 2026 23 of 58 Debenture Trustee to immediately issue the default notice and their sole

discretion and option exercised through the Debenture Trustee any or all of

the combination of all the remedies set out in clause 19.2. Clause 19.3 is as

follows:

"19.3 Upon the occurrence of an Event of Default which is not capable of being cured, the Debenture Holders may cause the Debenture Trustee to immediately Issue the Default Notice and at their sole discretion and option, exercise through the Debenture Trustee, any or all of or a combination of, the remedies set out at Clause 19.2, notwithstanding the other rights of the Debenture Holders under this Deed."

17. The above clauses thus require cure notice to be issued by Debenture

Trustee to company on event of default. In the present case notice dated

29.12.2020 which gives 15 days period for making the period is as per Clause

19.2 and is a notice providing cure period of 15 days for payment of amount

of ₹29, 72, 29, 959/-. We have already extracted the relevant part of the

notice dated 29.12.2023. The notice is clearly called upon the corporate

debtor to pay amount aggregating to ₹29,72,29,959/- along with the

additional coupon @ 5% per annum on monthly basis over and above

documented interest rate, penalty charges and all applicable charges in the

terms of DTD. As noted above on 29.12.2023, the principal payment of ₹146

crore was not due. The R-1 itself having extended the date for payment of

principal amount as 30.06.2024 vide letter dated 27.06.2023, as extracted

above. The notice required the corporate debtor to pay the amount "within

15 days from the date of receipt of this notice, failing with the debenture trust

shall be constrained to inter alia enforce the securities for any part thereof

that have been created to secure the debenture and enforce all such rights Comp. App. (AT) (Ins.) Nos. 266 of 2026 24 of 58 that are available to them under applicable laws". Notice further mentioned

that it is without prejudice to and or without impairing affecting any of rights

or rights of the Debenture Holder under DTD. As noted above account of

default committed by corporate debtor and after expiry of the cure period

Debenture Holders may at their sole discretion and option exercise through

Debenture Trustee any or all of or a combination, the following remedies:

"(a) Terminate the Definitive Agreements in accordance with the terms thereof;

(b) Require the Company to redeem all the outstanding Debentures, within 10 (ten) days of the expiry of the Cure Period such that the Debenture Holders achieve the Default Redemption Price:

(c) Require the Promoters to purchase all the outstanding Debentures, within 10 (ten) days of the expiry of the Cure Period, such that the Debenture Holders achieve the Default Redemption Price:

(d) Appoint such numbers of Director's on the Board of the Company and the Land Owning Companies as the Investors deem appropriate (Debenture Director(s)"):

Provided that. subject to Applicable Law, the Company, the Land Owning Companies and the Promoters expressly agree and undertake that:

(A) The Debenture Director shall not be liable for any default or failure of the Company or the Land Owning Companies in complying with the provisions of any applicable Law, Including but not limited to, defaults under the Companies Act, taxation and labour Laws of India;

(B) The Debenture Director shall not be identified as an officer in default of the Company or the Land Owning Companies, or occupiers of any premises used by the Company or the Land Owning Companies or employers under applicable Law; and (C) The Articles of Association of the Company and the Land Owning Companies shall provide for indemnification of the all Directors including the Debenture Director. up to the extent permitted under

Comp. App. (AT) (Ins.) Nos. 266 of 2026

25 of 58 Law. All Directors shall be indemnified, out of the Assets and capital of the Company or the Land Owning Companies against any liability Incurred by the Directors in defending any proceedings, whether civil or criminal, against the Company or the Land Owning Companies."

18. Admittedly, the payment was not made in pursuance of the cure notice

29.12.2023, hence the default of payment of ₹29,72,29,959/- is fully

established, but there is no further action taken by the Debenture Holders or

Debenture Trustee nor any notice issued after 29.12.2023 requiring the

company to redeem all the outstanding debentures within 10 days of expiry

of the cure period. As noted above Debenture Trustee having already

extended the period for payment of principal amount of ₹146 crore till

30.06.2020 probably due to the above reason, no notice was even issued for

requiring the payment of ₹146 crore by the company.

19. We, thus find substance in the submission of the appellant that the

financial creditor has failed to show any basis in Section 7 application when

they claim the entire amount in default of ₹274,13,45,241/-. As noted above,

while calculating the amount of ₹274,13,45,241/- under Item 1 of Part IV,

they have been added the principal amount of ₹146 crore. The principal

amount never became due nor there was any notice requiring the company to

pay the principal amount. The claim of ₹274,13,45,241/- in so far it adds the

principal amount of debenture is not in accordance with the DTD and the

Debenture Trustees were not entitled to claim default of principal amount on

date when the file Section 7 application i.e., 24.01.2024. However, the records

clearly indicate that there was clear default on the part of the company for

non-payment of amount of ₹29,72,29,959/- with regard to which notice on Comp. App. (AT) (Ins.) Nos. 266 of 2026 26 of 58 29.12.2023 was issued and even after accepting the submission of the

appellant that principal amount of ₹146 crore was not due. Amount defaulted

on the date of filing of Section 7 application was well within threshold of ₹1

crore.

20. We may further notice the submission of the appellant that during

pendency of Section 7 application, they have paid the amount of ₹37.2 crore

which fact is not disputed. The R-2, however, had contained that the payment

of ₹37.2 crore cannot absolve the company from default and that the amount

of ₹37.2 crore was not sufficient even to cover the defaulted amount of

interest. It is submitted that further amount of interest, appellant claims

payment of ₹37.2 crore between the period 16.01.2024 to 13.09.2024, and

further payment of ₹50 lakhs are claimed on 14.04.2024. On the date when

Section 7 application was filed, there was default on the part of the corporate

debtor which fully entitled the Debenture Trustee to initiate proceedings

under Section 7. Payment of ₹37.2 crore during pendency of Section 7

application cannot be held to liquidate the amount defaulted by the company.

21. In view of the above discussions and our conclusions, we answer

Question Nos. (I), (II) & (III) in following manner:

I. There was default on the part of the company to pay the amount of

₹29,72,29,959/- on the date when Section 7 application was filed, the

amount claimed in the Part IV of Section 7 application of ₹274 crore

and odd was not correct amount which incorrectly has included the

amount of principal payment of debentures of ₹146 crore which was

Comp. App. (AT) (Ins.) Nos. 266 of 2026 27 of 58 due only on 30.06.2024, and there was no action taken by trustee after

the notice dated 29.12.2023, even requiring the payment of principal

amount of debenture.

II. The financial creditor in Section 7 application has fully proved the debt

and default on the part of the corporate debtor, the corporate debtor

having not paid the amount due payment of quarterly interest amount

from 15.03.2022, default was thus clearly established.

III. By payment of ₹37.2 crore during pendency of Section 7 application by

the company to the financial creditor, it cannot be held that default by

the company has been liquidated and the default stood cured.

Question No. (IV):

22. Before the adjudicating authority, the corporate debtor has raised the

plea of project-wise insolvency. It was further pleaded that present debt of

company of the financial creditor is project specific in nature, hence the

insolvency ought to be initiated only on the project-wise basis and not against

the corporate debtor as a whole, which has been noticed in paragraph 16 of

the judgement, which is as follows:

"Project-wise Insolvency:

16. The Respondent has vehemently contended that the present debt is project specific in nature and, therefore, insolvency, if any, ought to be initiated only on a project-wise basis and not against the Corporate Debtor as a whole. This submission, though elaborately argued, is neither borne out from the factual matrix nor sustainable in law and deserves to be rejected for the reasons recorded hereinafter."

Comp. App. (AT) (Ins.) Nos. 266 of 2026 28 of 58

23. The adjudicating authority has observed that Insolvency & Bankruptcy

Code recognises insolvency as of a corporate debtor and not of the individual

project. The said observations have been made in paragraph 16.1 which are

as follows:

"16.1. Statutory Scheme under the IBC At the outset, it is pertinent to note that the Insolvency and Bankruptcy Code, 2016 recognises insolvency of a "Corporate Debtor" and not of an individual project. Section 3(8) of the Code defines 'Corporate Debtor' as a corporate person who owes a debt to any person. The Code does not envisage a real estate project as an independent juridical entity capable of being subjected to initiation of CIRP. Further, Section 7(5)(a) mandates admission of an application once debt and default are established against the Corporate Debtor. The present petition has been filed against Vatika Limited as a corporate debtor and not against any specific project, and the statutory mandate cannot be diluted at the threshold by importing a project-wise filter at the admission stage."

24. Further in paragraph 16.5, the adjudicating authority has noted

provisions of Code providing for project-wise resolution. In paragraphs 16.5,

16.6 and 16.7 adjudicating authority made following observations while

rejecting the plea of the corporate debtor, seeking project-wise insolvency:

"16.5. Code provides for Project wise Resolution and not for Project-wise Insolvency At this stage, it is relevant to refer Regulations 4D and 36A to the Insolvency and Bankruptcy Board of India (Resolution Process for Corporate Persons) Regulations, 2016, as inserted in the said Regulations, 2016 by the Insolvency and Bankruptcy Board of India (Resolution Process for Corporate Persons) (Amendment) Regulations, 2024. Regulation 4D, of the Regulations, 2016, reads as under:

"4D. Operating separate bank account for each real estate project. Where the corporate

Comp. App. (AT) (Ins.) Nos. 266 of 2026 29 of 58 debtor has any real estate project, the interim resolution professional or the resolution professional, as the case may be, shall operate a separate bank account for each real estate project."

Further, Regulation 36A, of the Regulations, 2016 provides as follows:

"36A. Invitation for expression of interest.

(1) The resolution professional shall publish brief particulars of the invitation for expression of interest in Form G of the Schedule I at the earliest, not later than sixtieth day from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans. [Clarification: The resolution professional after the approval of the committee may invite a resolution plan for each real estate project or group of projects of the corporate debtor.]"

A conjoint reading of the aforesaid provisions makes it abundantly clear that the statutory scheme under the Code and the Regulations provides only for project wise resolution after admission of the application, subject to approval of the Committee of Creditors, and does not contemplate initiation of insolvency proceedings on a project wise basis. The role of the Resolution Professional to invite resolution plans for individual projects arises only after commencement of CIRP and cannot be invoked to defeat admission of an application under Section 7 of the Code.

16.6. It is also apposite to note, that the very concept of "project-wise insolvency" has been viewed as inherently inconsistent with the foundational structure of the Insolvency and Bankruptcy Code, 2016. In this context, it is necessary to understand the legislative intent behind the framework as was also explained by Sri Baijayant Panda, Chairperson of the Parliamentary Select Committee on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025. It has been observed that insolvency under the Code is necessarily of a company and not of a project. The distinction drawn is between project-wise resolution, which may be operationally undertaken within CIRP, and insolvency itself, which statutorily attaches only to the corporate person. It is to be noted that permitting insolvency to

Comp. App. (AT) (Ins.) Nos. 266 of 2026 30 of 58 remain confined to a project would dilute the core principle of the Code that default results in displacement of control of the corporate debtor and replacement of the promoter. Allowing promoters to retain control of the corporate entity while carving out isolated projects for insolvency would defeat the deterrent and disciplinary architecture embedded in the Code. This reinforces the position that while project-wise resolution mechanisms may be employed post admission within the CIRP framework, the initiation of insolvency proceedings itself cannot be restricted to a project alone.

16.7. Accordingly, the contention of the Corporate Debtor seeking project wise insolvency at admission stage is untenable and deserves to be rejected."

25. It is further relevant to notice that in paragraph 5 of the judgement

adjudicating authority itself has noticed the case of the appellant for project-

wise insolvency in a tabular form. Paragraph 2 under the heading "Reply of

the Corporate Debtor" is as follows:

Reply of the Corporate Debtor "2. Project-wise Insolvency The Corporate Debtor contends that the debenture financing was intrinsically linked to a specific real estate project and therefore insolvency, if any, can only be project wise and not against the Corporate Debtor as a whole. It is submitted that corporate wide CIRP would adversely affect other ongoing projects and stakeholders. Reliance is placed on Mansi Brar Fernandez v. Shubha Sharma, 2025 SCC OnLine SC 1972, Flat Buyers Association Winter Hills 77 v. Umang Realtech Pvt. Ltd., 2020 SCC OnLine NCLAT 1199 and Amit Jain v. IDBI Trusteeship Services Ltd., 2025 SCC OnLine NCLAT 1753."

26. In the above plea of the corporate debtor as noticed by the adjudicating

authority itself, reliance was placed on three judgements. First judgement

relied was judgement of the Hon'ble Supreme Court in 'Mansi Brar

Fernandes' (supra), and second judgement relied was judgment of this

Comp. App. (AT) (Ins.) Nos. 266 of 2026 31 of 58 Tribunal in 'Flat Buyers Association Winter Hills - 77, Gurgaon' (supra),

and third judgment relied was judgment of this Tribunal in 'Amit Jain

(Suspended Directors of Mahagun (India) Pvt. Ltd.)' (supra).

27. Learned counsel for the appellant has also relied on the recent

judgement of this Tribunal in 'Gagan Tandon & Ors.' (supra). It shall be

sufficient to notice the judgement of this Tribunal in 'Gagan Tandon & Ors.'

(supra), where this Tribunal has noted earlier judgements on the subject.

This Tribunal in the above judgement has first noted the judgement of the

Hon'ble Supreme Court in 'Mansi Brar Fernandes' (supra) and relevant

paragraph of the Hon'ble Supreme Court. We need to refer to the judgement

of the Hon'ble Supreme Court in 'Mansi Brar Fernandes' (supra). The above

appeal arose out of insolvency resolution process of Real Estate Project. In

paragraph 15.5 of the judgement Hon'ble Supreme Court has laid down that

a balanced judicial approach had to be adopted. In paragraph 15.5 following

has been held:

"15.5. A balanced judicial approach in this regard will have far- reaching benefits : protecting homebuyers, restoring confidence in the real estate market, and encouraging reputed business houses and conglomerates to participate in residential development. In taking this approach, this court seeks to contribute towards cleansing and strengthening a core economic sector that sustains millions of livelihoods in both the organised and unorganised economy and touches the lives of people at their most fundamental level."

28. Hon'ble Supreme Court in the above judgement has also held that right

of shelter is a fundamental right. Various directions were issued by the

Comp. App. (AT) (Ins.) Nos. 266 of 2026 32 of 58 Hon'ble Supreme Court in the above judgement. The directions issued in

paragraphs 21.2(5) & 21.2(6), which are relevant reads as follows:

"21.2. In exercise of this court's jurisdiction, and to advance the constitutional and statutory objectives, the following directions are issued to the concerned authorities, in the larger interests of bona fide homebuyers and the stability of the real estate sector, which demand coordinated action by all stakeholders:

(5) Since real estate is the second largest sector in the Insolvency and Bankruptcy Code proceedings, IBBI [ Insolvency and Bankruptcy Board of India.] , in consultation with the RERA, authorities, shall constitute a council to frame specific guidelines for insolvency proceedings in real estate, including timelines for project- wise the corporate insolvency resolution process, and safeguards for allottees.

(6) Resolution of real estate insolvency should, as a rule, proceed on a project specific basis rather than the entire corporate debtor, unless circumstances justify otherwise. This would protect solvent projects and genuine homebuyers from collateral prejudice. The Insolvency and Bankruptcy Board of India shall also devise a mechanism to enable handover of possession to willing allottees where substantial units in a project are complete."

29. This Tribunal in 'Gagan Tandon & Ors.' (supra) has noticed the

judgement of Hon'ble Supreme Court in paragraphs 77 to 80 and in

paragraph 81, this Tribunal in 'Gagan Tandon & Ors.' (supra) held as

follows:

"81. What Hon'ble Supreme Court has held in the above case is that resolution of real estate insolvency should, as a rule, proceed on a project specific basis rather than the entire CD, unless circumstances justify otherwise. This would protect solvent projects and genuine homebuyers from collateral prejudice."

Comp. App. (AT) (Ins.) Nos. 266 of 2026 33 of 58

30. In 'Gagan Tandon & Ors.' (supra), this Tribunal has noted relevant

provisions of the Insolvency and Bankruptcy Board of India (Insolvency

Resolution Process for Corporate Persons) Regulations, 2016 (for short the

'CIRP Regulations, 2016'), which has also been noticed by the adjudicating

authority. In paragraphs 82, 83 and 84, following was observed:

"82. We also need to notice certain provisions of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), which deals with the process for resolution of a CD, with respect to resolution of a real estate company, which has several real estate projects, few amendments have been made in the CIRP Regulations, which need to be noticed. The CIRP Regulations as originally framed did not envisage any real estate project resolution. In Regulation 36A for the first time by amendment in Regulation 36A(1), a clarification has been added with effect from 15.02.2024. Regulation 36A, sub-regulation (1) with clarification provides as follows:

"36A(1) The resolution professional shall publish brief particulars of the invitation for expression of interest in Form G of the 123[Schedule-I] at the earliest, 124[not later than sixtieth day]from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans.

[Clarification : The resolution professional after the approval of the committee may invite a resolution plan for each real estate project or group of projects of the corporate debtor.]

83. The above provision is an enabling provision that empowers the RP after approval of CoC, to invite Resolution Plans for each real estate project or projects of the CD. The above Regulation thus, clearly contemplates the steps to be undertaken by the RP when there is more than one real estate project of the CD. Certain further amendments have been made in the Regulation with effect from 03.02.2025, which also needs to be noticed. Regulation 4E has been added with effect from 03.02.2025, which is as follows:

Comp. App. (AT) (Ins.) Nos. 266 of 2026 34 of 58 "4E. Handing over the possession. After obtaining the approval of the committee with not less than sixty-six percent of total votes, the resolution professional shall hand over the possession of the plot, apartment, or building or any instruments agreed to be transferred under the real estate project and facilitate registration, where the allottee has requested for the same and has performed his part under the agreement."

84. In Regulation 18, sub-regulation (4) has been inserted vide Notification dated 03.02.2025, which empowers the CoC to invite the competent authority, i.e. Real Estate (Regulation and Development) Act, 2016. Sub-regulation (4) of Regulation 18 is as follows:

"18(4) Where the corporate debtor has any real estate project, the committee may direct the resolution professional to invite the 'competent authority' as defined in clause (p) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016) related to such project to attend such meeting(s) of the committee, as the committee may decide, without voting rights, for providing inputs on matters associated with the development of such project."

31. This Tribunal, even after noticing the above Regulations as amended

had observed that the said amendments throw very little lights over the

complexities and difficulties which arise in the resolution of Real Estate

Project. This Tribunal in 'Gagan Tandon & Ors.' (supra), has relied on

earlier judgement of 'Flat Buyers Association Winter Hills - 77, Gurgaon'

(supra), and has quoted the relevant paragraph. Paragraph 85 of the

judgement of this Tribunal in 'Gagan Tandon & Ors.' (supra) reads as

follows:

"85. The above Regulations, even after amendments as noted above, throw very little light over the complexities and difficulties, which arise in the resolution of the real estate project, undertaken by a real estate Company. There have been several

Comp. App. (AT) (Ins.) Nos. 266 of 2026 35 of 58 precedence of this Tribunal, where this Tribunal had occasion to consider the resolution of a real estate project. The judgment of this Tribunal in Company Appeal (AT) (Ins.) No. 926 of 2019 - Flat Buyers Association Winter Hills - 77, Gurgaon v. Umang Realtech Pvt. Ltd. through IRP is one of such cases, where this Tribunal has noticed the problems in following certain process in the cases of infrastructure companies (for allottees). In Paragraphs 9 and 10 of the judgment, following observations have been made:

"9. In terms of the 'I&B Code' and the decisions of the Hon'ble Supreme Court, the 'Resolution Plan' must maximise the assets of the Corporate Debtor and balance the stakeholders (secured and unsecured creditors-Financial Creditors/Operational Creditors).

10. The Infrastructure which is constructed for the allottees by Corporate Debtor (Infrastructure Company) is an asset of the Corporate Debtor. The assets of the Corporate Debtor as per the Code cannot be distributed, which are secured for 'Secured Creditors'. On the contrary, allottees (Homebuyers) who are 'Unsecured Creditors', the assets of the Corporate Debtor which is the Infrastructure, is to be transferred in their favour ('Unsecured Creditors') and not to the 'Secured Creditors' such as Financial Institutions/Banks/NBFCs."

32. Paragraph 86 further notices the paragraph 21 of the judgement of the

'Flat Buyers Association Winter Hills - 77, Gurgaon' (supra). Paragraph

86 of the judgement is as follows:

"86. The Hon'ble Supreme Court in the above case has also noticed the concept of "reverse corporate insolvency resolution process". This Tribunal in the above judgment, which was delivered on 04.02.2020 had observed that in the CIRP against a real estate, if allottees (Financial Creditors) or Financial Institutions are of one project initiated CIRP against the CD, it be confined to the particular project and it cannot affect other projects of the real estate company in other places. In Paragraph 21 of the judgment, following was laid down:

Comp. App. (AT) (Ins.) Nos. 266 of 2026 36 of 58 "21. In Corporate Insolvency Resolution Process against a real estate, if allottees (Financial Creditors) or Financial Institutions/Banks (Other Financial Creditors) or Operational Creditors of one project initiated Corporate Insolvency Resolution Process against the Corporate Debtor (real estate company), it is confined to the particular project, it cannot affect any other project(s) of the same real estate company (Corporate Debtor) in other places where separate plan(s) are approved by different authorities, land and its owner may be different and mainly the allottees (financial creditors), financial institutions (financial creditors, operational creditors are different for such separate project. Therefore, all the asset of the company (Corporate Debtor) are not to be maximized. The asset of the company (Corporate Debtor - real estate) of that particular project is to be maximized for balancing the creditors such as allottees, financial institutions and operational creditors of that particular project. Corporate Insolvency Resolution Process should be project basis, as per approved plan by the Competent Authority. Any other allottees (financial creditors) or financial institutions/banks (other financial creditors) or operational creditors of other project cannot file a claim before the Interim Resolution Professional of other project and such claim cannot be entertained.

So, we hold that Corporate Insolvency Resolution Process against a real estate company (Corporate Debtor) is limited to a project as per approved plan by the Competent Authority and not other projects which are separate at other places for which separate plans approved. For example - in this case the Winter Hill - 77 Gurgaon Project of the 'Corporate Debtor' has been place of Corporate Insolvency Resolution Process. If the same real estate company (Corporate Debtor herein) has any other project in another town such as Delhi or Kerala or Mumbai, they cannot be clubbed together nor the asset of the Corporate Debtor (Company) for such other projects can be maximised."

Comp. App. (AT) (Ins.) Nos. 266 of 2026 37 of 58

33. This Tribunal clearly laid down following in paragraph 87 holding that

"we have no hesitation to hold that when CIRP initiated by allottees or

Financial institutions, under Section 7 relates to one project, the CIRP

has to be confined to the said project and cannot take into its fold, the

other real estate projects, situated in other cities or other states".

34. The adjudicating authority in the impugned order, although has noticed

the judgement of the Hon'ble Supreme Court in 'Mansi Brar Fernandes'

(supra) and this Tribunal in 'Flat Buyers Association Winter Hills - 77,

Gurgaon' (supra), and 'Amit Jain (Suspended Directors of Mahagun

(India) Pvt. Ltd.)' (supra), but has not even adverted to the said judgements,

law laid down by this Tribunal and the Hon'ble Supreme Court is fully binding

on the adjudicating authority without adverting to the said judgements which

had clearly held that project-wise insolvency process can begin and where the

CIRP initiated by allottees or a financial institution, with respect to one

project, it cannot take in its fold in other cities or other states. The judgement

of the 'Gagan Tandon & Ors.' (supra), was delivered by this Tribunal on

07.01.2026, where the impugned judgement has been passed by the

adjudicating authority on 03.02.2026. The adjudicating authority has neither

dealt the judgement of this Tribunal in 'Gagan Tandon & Ors.' (supra), nor

those judgments of this Tribunal and the Hon'ble Supreme Court which has

been noticed by the adjudicating authority itself in paragraph 5 as noticed

above.

35. We thus of the view that view taken by the adjudicating authority that

project-wise insolvency cannot be held is not in accordance with law and has Comp. App. (AT) (Ins.) Nos. 266 of 2026 38 of 58 to be disapproved. Adjudicating authority felled in error in taking the view,

contrary to the view taken by this Tribunal, which was clearly binding on the

adjudicating authority.

36. We thus answer Question No. (IV) in following manner:

IV. The view of the adjudicating authority that insolvency cannot be

project-wise in case of Real Estate Company and only resolution can be

project-wise, is not in accordance with law laid down by this Tribunal

and the Hon'ble Supreme Court.

Question Nos. (V) & (VI):

37. We need to notice the DTD dated 30.06.2017, which is a document

under which debentures were issued to the company amounting to ₹146

crore. The DTD under Clause C indicated that the landowning company and

the promoters are desirous of developing the project (as hereinafter defined)

on the property (as hereinafter defined). Thus, Clauses C & D are as follows:

"(C) The Company, the Land Owning Companies and the Promoters are desirous of developing the Project (as hereinafter defined) on the Property (as hereinafter defined).

(D) The Company has availed a rupee term loan from Indiabulls Housing Finance Limited ("Lender) (such loan referred to as "Loan"), A loan agreement has been executed among, Inter alia, the Company and the Lender (the "Loan Agreement"). In terms of the Loan Agreement, the Company has mortgaged the Properly (as defined hereafter) in favour of the Lender, created a first charge on the Receivables (as defined hereafter) In favour of the Lender, it is hereby clarified that. on or before the Closing Date, the Company shell have obtained a no objection certificate from the Lender, in Agreed Form, to the satisfaction of the Investors."

Comp. App. (AT) (Ins.) Nos. 266 of 2026 39 of 58

38. In Clause D, it was mentioned that company has obtained a loan on the

property and created a first charge on the receivables and the company shall

obtain a NoC from the lender. Clause 1 deals with the various definition.

Definition Business Plan clearly refers to the project. Definition Business Plan

is as follows:

""Business Plan" shall mean the half yearly business plan, as may be revised from time to time, governing the construction, development and commercial exploitation of the Project. In form and substance and content agreed to by the Investors and the Company. prepared by the Company and the Land Owning Companies (setting out half yearly targets for the Project), which shall be reviewed and updated at the start of every half yes: In the manner set forth in Clause 15.1, which shall include without limitation:

i. Sales price and fixing of a minimum price of units in the Project, and sales volumes;

ii. Construction milestones, cost estimates and building specifications;

iii. Construction Costs, Sales Expenses. Project Taxes; iv. Marketing and sales strategy;

v. Development mix, building massing and phasing; vi. Appointment of contractors and consultants for the Project;

vii. Loans to be availed;

viii. Layout plan of the Project;

ix. Saleable area of the Project;

x. Drawdown schedule of any loans availed from any lenders for the purpose of the Project: xi. Status and review of Government Approvals; and xii. Any decision materially affecting or substantially changing the Project or the Property; The initial Business Plan as agreed to amongst the Parties is annexed hereto as Schedule XIII;"

Comp. App. (AT) (Ins.) Nos. 266 of 2026 40 of 58

39. Hypothecated Property is defined in following words:

"Hypothecated Property" shall mean a first charge. in favour of the Debenture Trustee (acting on behalf of and for the benefit of the Debenture Holders) on:

(a) the Escrow Accounts of the Land Owning Companies and the Company:

(b) all the moneys, securities, instruments, Investments, and other properties deposited in, credited to or required to be deposited in or credited to or lying to die credit of the Escrow Accounts of the Land Owning Companies and the Company or liable to be credited to such accounts including, without limitation due to any actions taken or right exercised by the Company and the Land Owning Companies, and all the moneys lying to the credit of such accounts or liable to be credited to such accounts, including any interest accruing in respect thereof;

(c) developed undeveloped portion of the Project along with proportionate share of the Property, including any current & future FSI and any additional development rights on the Property:

(d) All cash flow in relation to the Project and Receivables of the Company and the Land Owning Companies from the Project and Property Including any fixed deposits created out of such monies from time to time together with all and any Interest accruing in respect thereof: and

(e) all present and future book debts, outstandings, moneys receivable, claims and bills which are now due and owing or which may at any time during the continuance of the Debenture Security become due and owing to the Company/Land Owning Companies from any Person in relation to the Project and Property;"

40. The Project has also defined in following words:

""Project" shall mean the development of a group housing project, comprising, inter-alia of residential apartments, to be developed on the Property in accordance with the Consents, Governmental Approval, applicable Law, Business Plan and/or Definitive Agreements:"

Comp. App. (AT) (Ins.) Nos. 266 of 2026 41 of 58

41. Property is defined as land to the extent of 12.212 acres situated in

Sector 88 B, Village Harsaru, District Gurgaon, which is as follows:

""Property" shall mean the land to the extent of 12.212 acres of land as located in Sector 88B, Village Harsaru, District Gurgaon. Haryana, owned by and held in the name of the Land Owning Companies, as more particularly described at Schedule XI. where the Project is proposed to be developed:"

42. The above clauses thus clearly indicate that project was contemplated

on property to the extent of 12.212 acres situated in Sector 88 B, Village

Harsaru, District Gurgaon. The above clauses thus clearly indicate that

project was contemplated on the property to the extent of 12.212 acres

situated in Sector 88, Village Harsaru. The subsequent clauses throw

considerable light on the arrangement between the parties. Clause 14.2

which contains obligation of company which requires that company shall

develop the project in accordance with the business plans and transfer the

property and other assets in accordance with the commercial practice. Clause

14.2(b) is as follows:

"14.2 The Company shall:

(b) Develop the Project In accordance with the Business Plan and Transfer the Property and any other Assets using procedures in accordance with sound commercial practices and as contemplated in the Business Plan and in compliance with the terms of this Deed;"

43. Further, Clause 14.2(f) contemplate that prior to sale no objection

certificate from the Debenture Trustee has to be obtained for release of charge.

Clause 14.2(f) is as follows:

"14.2 The Company shall:

Comp. App. (AT) (Ins.) Nos. 266 of 2026 42 of 58

(f) Ensure that the Security Cover is least 2 (Two) times of the amount of Secured Obligations at all times:"

44. Thus, the above clauses clearly indicate the charge of the trustee on the

project and on every part of land and for sale of any asset requirement of prior

no objection from lender was contemplated. Business Plan is defined in

Clause 15.1. Clause 15.3, which dealt with debt financing which permit

construction finance upto ₹50 crore. Clause 15.3.1 is as follows:

"15.3.1 The Promoters shall ensure that each of the Company and the Land Owning Companies do not, the Company shall ensure that the Land Owning Companies do not, and each of the Company and the Land Owning Company undertake not to incur any Financial Indebtedness or any other liability except for an aggregate construction finance upto Rs.50,00,00,000/- (Rupees Fifty Crores Only) for the sole purposes of the development of Project. Such construction licence shall rank pari-passu with Debentures. It is clarified that the restriction on the Company and the Land Owning Company under this Clause 15.3 is limited to Financial Indebtedness or other liability relating to the Project."

45. Clause 15.4 provides for appointment of Project Management

Consultant, which was to be appointed by the Debenture Holders. Clause

15.4 is as follows:

"15.4 Appointment of Project Management Consultant The Debenture Holders shall have the right to appoint a project management consultant at any time to review the Business Plan and the Cast of Development of the Project. Costs associated with the same shall be borne by the Company."

46. Clause 15.5 dealt with RERA and obliged the company to comply with

the provisions of RERA at all times. Clause 15.5.1 is as follows:

Comp. App. (AT) (Ins.) Nos. 266 of 2026 43 of 58 "15.5.1 The Promoters and the Company shall ensure that the Company and the Land Owning Companies comply with the provisions of the RERA at all times and the Company shall on a quarterly basis, and at any time upon request from the Debenture Trustee. cortify compliance with the provisions of the RERA."

47. Clause 17 also empowers the Debenture Holders to appoint the internal

auditor solely for the purposes of reviewing records and documents relating

to the project. Clause 17.1 is as follows:

"17.1 The Debenture Holders shall have the right to appoint an Internal auditor solely for the purpose of reviewing records, accounts. documents etc. relating to the Project. Without prejudice to the rights of the internal auditor under applicable Law or as per Its terms of engagement, such auditor shall be entitled to review inter alia the financial details of the Project including costs Incurred, sales, management Information system and other accounting details, whether on a quarterly basis or otherwise, and for this purpose shall be entitled to review the relevant books and records of the Company or the Land Owning Companies All costs associated with the same shall be borne by the Company."

48. The above clauses clearly indicate that what was contemplated was the

development of a project on a specified land for which various provisions were

made and clauses incorporated in the DTD, creating charge of the Debenture

Holders on the project land and no unit was to be sold without taking prior

approval of no objection of the Debenture Trustee. Project Monitoring

Committee was to be appointed by the Debenture Holders and they can

appoint the internal auditors. The above provisions indicate full and complete

control of the Debenture Holders on the project and the receivables in the

project. Escrow Account was also opened with respect to project receivables

and which was part of security.

Comp. App. (AT) (Ins.) Nos. 266 of 2026 44 of 58

49. Now we come to the relevant classes which provides for debenture

security. Clause 9 deals with the terms of debenture and debenture security.

Clause 9.7 deals with the debenture security. Clause 9.7 is as follows:

"9.7 In consideration of the Debenture Holders subscribing to the Debentures In terms hereof and for the purpose of securing the payment of the Secured Obligations and the due discharge of the Secured Obligations by the Obligors under the Definitive Agreements, the Obligors hereby agree to create the requisite Security Interest specified in column (2) of the table below (collectively the Debentures Security, which Security Interest is more fully described in the corresponding document, where applicable) within the timelines specified in column (4) of the table below by taking all requisite actions in this regard including providing/executing the corresponding document (including payment of requisite stamp duty and registration. if required) specified in column (3) of the table below:

(1) (2) (3) (4) S. Debenture Debenture Timeline for No. Security Security Creation of Documents Debenture Security 1. Equitable Memorandum Within 7 mortgage by of Entry, (Seven) days deposit of title Directors' from the deeds on the Declarations Closing Date Project and and Tripartite the Property Letter on a first charge basis to favour of the Debenture Trustee 2. First exclusive Deed of On or prior to charge by Hypothecation the Closing way of (including the Date hypothecation power of over the attorney Hypothecated therein) Property contained together with

Comp. App. (AT) (Ins.) Nos. 266 of 2026 45 of 58 all and any interest acquiring in respect thereof in accordance with the Deed of Hypothecation 3. Execution of Power of On the Closing the Power of Attorney Date Attorney by the the Company in favour of the Debenture Trustee 4. Execution of Escrow Within 7 the Escrow Agreement (Seven) days Agreement Account from the and setting up Closing Date of the Escrow Accounts in accordance with the Escrow Account Agreement 5. Issuance of Corporate On or prior to the Corporate Guarantees the Closing Guarantees Date

6. Issuance of Personal On or prior to the Personal Guarantees the Closing Guarantees Date

7. Handover of Post Dated On or prior to the Post Dated Cheques the Closing Cheques Date

8. Execution of Shortfall On or prior to the Shortfall Undertaking the Closing Undertaking Date

9. Execution of Demand On or prior to Demand Promissory the: Closing Promissory Note and the Date Note and the

Comp. App. (AT) (Ins.) Nos. 266 of 2026 46 of 58 Letter of Letter of Continuity Continuity

10. Charge/lien Debenture Within 1 (One) over DSR Trust Deed (as Business Day provided in from the terms of Allotment Date Clause 14.1 (d)) 11. Such other As may be As and when security as required required by may be based on the the Debenture required to Security Holders maintain the Interest being Security Cover created in accordance with this Deed as may be required by the Debenture Holders

50. The above clearly contemplated equitable mortgage or deposit of title on

the property and the property on first charge basis. The first exclusive charge

by way of hypothecation over the hypothecated property was also

contemplated. The securities also included execution of Power of Attorney,

Escrow Agreement, Corporate Guarantee, Personal Guarantee, Post-Dated

Cheques, Letter of Shortfall Undertaking, and Promissory Note.

51. Thus, above clauses clearly indicate that the security was basically the

mortgage of the project and the property as well as the hypothecation over the

hypothecated property together with all any interest accruing in respect

according to the deed of hypothecation. The above provision clearly indicate

that debentures were obtained by the company and the various provisions

indicate that the findings by debenture was for the purposes of the project on

Comp. App. (AT) (Ins.) Nos. 266 of 2026 47 of 58 the project property that is land bearing 12.212 acres situated in Sector 88 B

was contemplated.

52. At this juncture, we may notice one submission of the respondent.

Respondent submits that the project has been registered by the company in

the year 2022, hence there was no contemplation at the relevant time

regarding the 'Project Aspirations', hence the funding cannot be said to the

'Project Aspirations' which was got registered in the year 2022. In the appeal,

certain documents regarding registration of the HARERA and the license

issued by DTCP, license have been brought on record. It is relevant to notice

the license issued by DTCP as well as the RERA registration to consider the

submission. License No.13/2022 from DTCP has been brought on record.

The License No.13/2022, clearly mentions that license is granted for area

admeasuring 12.212 acres for setting of group housing colony in the revenue

state of Haryana, Harsaru, Sector 88 B, District Gurgaon:

"FORM LC-V (See Rule 12) HARYANA GOVERNMENT TOWN AND COUNTRY PLANNING DEPARTMENT Licence No.13. of 2022 This License has been granted under the Haryana Development and Regulation of Urban Areas Act, 1975 & the Rules 1976, made thereunder to Vatika Ltd., Aplin Developers Pvt. Ltd. in collaboration with Vatika Ltd. Unit No.-A-002, INXT City Centre, Ground Floor, Block-A, Sector-83, Vatika India Next, Gurugram- 122012 for setting up of Affordable Plotted Colony under DDJAY over an area measuring 12.20 acres (after migration from license No. 90 of 2013 dated 26.10.2013 granted for an area measuring 12.212 for

Comp. App. (AT) (Ins.) Nos. 266 of 2026 48 of 58 setting up of Group Housing Colony) in the revenue estate of village Harsaru, Sector-88B, Distt. Gurugram.

1. The particulars of the land, wherein the aforesaid Residential Plotted Colony is to be set up, are given in the Schedule annexed hereto and duly signed by the Director, Town & Country Planning, Haryana. ...

4. The license is valid up to 23/02/2027. Dated: The 24/02/2022. (K. Makrand Pandurang, Chandigarh IAS) Director, Town & Country Planning Haryana, Chandigarh Endst. No. LC-4560/Asstt(MS)/2022/5626 Dated: 24-02-2022

(S.K. Sehrawat) District Town Planner (HQ) For Director, Town & Country Planning Haryana Chandigarh"

53. Another license with respect for area 7.50 acres in addition to License

No.13/2022 in Sector 88 B was granted, which is as follows:

"FORM LC-V (See Rule 12) HARYANA GOVERNMENT TOWN AND COUNTRY PLANNING DEPARTMENT Licence No. 152 of 2022 This Licence has been granted under the Haryana Development and Regulation of Urban Areas Act, 1975 & the Rule 1976, made there under to Haldis Developers Pvt. Ltd., Sahar Land and Housing Pvt. Ltd., Acklin Developers Pvt. Ltd., Vatika INXT 2 Pvt. Ltd. in collaboration with Vatika Ltd. Regd. Office Unit No. A-002, INXT City Centre, Ground Floor, Block-A, Sector-83, Vatika India Next, Gurugram-122012 for setting up of Affordable Residential Plotted Colony under Deen Dayal Jan Awas Yojna 2016 on the land

Comp. App. (AT) (Ins.) Nos. 266 of 2026 49 of 58 additional area measuring 7.50 acres (in addition to Licence no. 13 of 2022 dated 24.02.2022) in the revenue estate of village Harsaru, Sector-88-B, Gurugram Manesar Urban Complex.

1 The particulars of the land, wherein the aforesaid Affordable Residential Plotted Colony is to be set up, are given in the Schedule annexed hereto and duly signed by the Director General, Town & Country Planning, Haryana.

...

6. The licence is valid up to 28/9/2027 Dated: 29/9/2022. (T. L. Satyaprakash, IAS) Place: Director General, Town & Country Planning Haryana, Chandigarh Endst. No. LC-4560-B/JE (SB)/2022/29597 Dated: 29-09-2022 A copy along with a copy of schedule of land is forwarded to the following for information and necessary action:-

(Narender Kumar) District Town Planner (HQ) For: Director General, Town & Country Planning Haryana Chandigarh"

54. When we look into the RERA registration relied by the appellant being

Registration Certificate, No.130/2022, the said registration is with respect to

Sector 88B, Gurgaon, area 19.70 acres, which refers to License No.13/2022

and License No.152/2022. It is useful to notice following part of the

Registration Certificate:

"REGISTRATION NO. 130 OF 2022 FORM REP-III [See rule 5(1)] HARYANA REAL ESTATE REGULATORY AUTHORITY GURUGRAM HARERA GURUGRAM Comp. App. (AT) (Ins.) Nos. 266 of 2026 50 of 58 REGISTRATION NO. 130 of 2022 RC/REP/HARERA/GGM/655/387/2022/13 Date: 23.12.2022 0 UNIQUE NO. GENERATED ONLINE RERA-GRG-PROJ-1170- 2022 REGISTRATION CERTIFICATE REAL ESTATE PROJECT - AFFORDABLE RESIDENTIAL PLOTTED COLONY UNDER DDJAY ASPIRATION

1. This registration is granted under Section 5 of the Real Estate (Regulation & Development) Act, 2016 to the following project. (A) PARTICULARS OF THE PROJECT REGISTERED S.N. Particulars Details

(i) Name of the project Aspiration

(ii) Location Sector 88 B, Gurugram

(iii) Licence no. and validity 13 of 2022 dated 24.02.2022 valid up to 23.02.2027 152 of 2022 dated 29.09.2022 valid up to 28.09.2027

(iv) Total licensed area of the project 19.70 Acres

(v) Area of project for registration 19.70 Acres

(vi) Nature of the project Affordable Residential Plotted Colony under DDJAY

(vii) Total saleable area of the project 41153.80 Residential registered 5 sq. m. = 38482.88 sq. m.

Commercia l= 2670.925 sq. m.

(viii) Number of units 304 Residential Plots and 1 Commercial Block"

55. The above clearly indicate that 'Project Aspirations' has been registered

on the project land which registration also include an extra additional land of

7.75 acre.

56. The project land is 'Project Aspirations' is proved from other materials

on records which we refer hereinafter. We have already noticed that under

Comp. App. (AT) (Ins.) Nos. 266 of 2026 51 of 58 the DTD dated 30.06.2017, the company was obliged to comply the provisions

of RERA. Provisions of the RERA was thus obligation of the company and the

company after the DTD has obtained certificate. We have already noticed that

the DTD refers to property as land of 12.212 acres situated in Sector 88 B,

which land is now part of the project, which land project was contemplated,

which project got subsequently registered in RERA in 2022. The fact that

registration of RERA was obtained in 2022 was in accordance with the terms

of DTCP which require the company to comply with the requirement of RERA.

The fact is that IDBI Trusteeship itself was well aware and dealing with the

'Project Aspirations' treating it to be a project which the Debenture Trustee

has charge is apparent from other materials on record. We have already

noticed that under the DTD, no objection was required for sale of any units

from the Debenture Trustee by the company. Company has issued various

letters to the IDBI Trusteeship seeking no objection. In response to the

request from the company, no objection certificates were issued by the

respondent with respect to different units in the Project "Aspirations".

Various letters dated 30.10.2023 with respect to different units of project has

brought on the record in the appeal. It is useful to notice one of the letters

issued by the R-1 dated 30.10.2023 to the company the corporate debtor,

which is as follows:

"IDBI Trusteeship Services Ltd.

CIN: U65991MH2001GO1131154 Ref: 59330/ITSL/2023-24 Date: 30-Oct-2023 Vatika Limited ("Vatika")

Comp. App. (AT) (Ins.) Nos. 266 of 2026

52 of 58 Unit No. A-002, INXT City Centre, Ground Floor, Block A, Sector 83, Vatika India Next, Gurugram 122012, Haryana Subject: No Objection to the sale of Plot No. 16, A4, Aspiration, Gurgaon-122505 in favour of Anil Kumar Sehrawat Dear Sir/Ma'am, This is in relation to 1260 and 1200 number of [fully secured, unlisted, unrated, redeemable, optionally convertible debentures aggregating to INR 1,26,00,00,000/- (Indian Rupees One Hundred Twenty Six Crores only) and INR 20,00,00,000/- (Indian Rupees Twenty crores only) issued to Indiabulls High Yield Fund ("IHYF") & Indiabulls Opportunities India Fund ("IOIF"), respectively (the "Debentures") in accordance with the debenture trust deed dated June 30, 2017 executed between Vatika Limited. IHYF, IOIF and IDBI Trusteeship Services Limited and other related documents ("Debenture Documents") Pursuant to your email dated October 09, 2023 we have been informed about your intention for sale of the below mentioned unit ("Unit") to Anil Kumar Sehrawat (the "Purchaser"), and accordingly you have requested us for issuance of a no objection certificate ("NOC") for release of our charge on the Unit and subsequent sale of the Unit Customer New Saleable Total Sale Total Balance Name Flat/Plot Area Consideration Amount receivable No. (Sqyd.) (INR) received (INR) (INR)

Anil 16 131 71,15,039 46,92,800 24,22,239 Kumar Sehrawat

Please note that IHYF and IOIF have perused your request and hereby conveys no objection to release its rights, claims, interest and charge over the Unit in Project Aspiration.

Subject to balance sales consideration (excluding TDS as applicable) le. an amount of INR 24,22,239/-("Said Amount") being transferred/deposited into the Escrow Account No. 57500001096352 held witn HDFC Bank, Comp. App. (AT) (Ins.) Nos. 266 of 2026 53 of 58 immediately upon sale of the Unit. In the event the Said Amount is not deposited in the manner stated in this NOC then this NOC shall stand terminated/withdrawn automatically without any notice to you All the cost, fees, stamp duty, penalty, expenses and charges for, inter alia, release of the charge(s) over the Unit shall be borne by Vatika. Please note that our aforesaid NOC is without prejudice to, and shall not affect, (i) the rights, remedies, claims and/or interests of the IHYF and IOIF under the Debenture Documents and/or the applicable laws and/or (ii) the obligations of the Obligor(s) under the Debenture Documents. Please note that the NOC for the abovementioned Unit will not affect the charge on any other plot/flat/shop/unit including the land and construction thereon or any other Security created in favour of IHYF and IOIF in relation to the Debentures This no-objection shall form an integral part of the Debenture Documents.

Capitalized terms used and not defined herein shall have the meaning as ascribed to such terms in the Debenture Documents.

Yours sincerely, For IDBI Trusteeship Services Limited Authorised Signatory"

57. The above letter clearly mentions that no objection is being issued with

regard to unit in the Project "Aspirations" Gurgaon. Thus, the party clearly

understood that the charge of the Debenture Trustee is on the 'Project

Aspirations'.

58. We may also notice submission of learned counsel for the respondent

relying on certain clauses of the DTD. Reliance has been placed on Clause

8.3 under the heading "Usage of Funds". Clause 8.3 provides as follows:

"8.3 The Promoters shall cause the Company to and the Company shall utilize the Subscription Amount to

Comp. App. (AT) (Ins.) Nos. 266 of 2026

54 of 58 meet the Company's on-going requirement of funds for business activities and general corporate purposes."

59. Learned counsel for the respondent submits that the usage of funds

requires a company on going requirement of funds for business activities and

general corporate purposes. He submits that the said is a very wide terms,

hence the funding cannot be said to be only for the project. We have already

noticed the other relevant clauses of the DTD, which clearly indicate that the

project was charged with Debenture Holders and the project charge with the

project units and other receivables were security for the Debenture Trustee.

In the judgement of the 'Gagan Tandon & Ors.' (supra), noted above IL&FS

has extended loan to the company where also there was a clause in similar

terms, requiring utilisation of funds for corporate purpose. This Tribunal

after noticing the relevant clauses of the DTD in above case has concluded

that in view of the securities as mentioned in the deed, the lenders in the

above case have rights to realise their debt from the securities. In the said

case, this Tribunal has ultimately concluded that CIRP in the said case ought

to have proceeded against the said project only. This Tribunal held that when

securities are with respect to specific project, CIRP cannot engulf all other

projects of corporate debtor which was held in paragraph 93 as noted above.

Learned Counsel for the respondent has also relied on paragraph 14.1(a),

which is as follows:

"14. COVENANTS OF THE COMPANY. THE LAND OWNING COMPANIES AND THE PROMOTERS 14.1 The Promoters shall ensure that the Company and the Land Owning Companies shall, and the Company and the Land Owning Companies shall:

Comp. App. (AT) (Ins.) Nos. 266 of 2026 55 of 58

(a) Apply the Subscription Amount exclusively in accordance with Clauses 6.2 and 8.3:"

60. Clause 8.3 we have already noticed. Clause 6.2 of the DTD is as follows:

"6.2 Notwithstanding anything to the contrary contained in this Deed of the Definitive Agreements, if, after payment of the relevant Subscription Amount, the Debentures are not allotted to the Investors on the Closing Date, the Company shall immediately refund the Subscription Amount lying in the Subscription Account to the Investors: and the Company shall pay an additional coupon of 5.00% (Five percent) per annum in addition to the coupon rate as specified in paragraph 3.1 of Schedule IX until the date of refund of the Subscription Amount."

61. Learned counsel for the respondent has also relied on the provisions

under which the additional security can be asked by the lenders by the

security trust deed. Clause 14.8(e)(1) has been referred. The above provision

is the enabling provisions which can require the company to provide

additional security.

62. The deposit of the title deed on 31.03.2023, which is also on the record

indicate the mortgage of the project land.

63. In view of the above discussions and conclusions, we are of the view

that the finance extended by the debentures was with respect to the project

and property situated on the land in Sector 88 B admeasuring to 12.212

acres, which subsequently got registered as Project "Aspirations."

64. We thus answer Question Nos. (V) & (VI) in following manner:

V. The DTD dated 30.06.2017 contemplated payment of the amount of

debenture amounting to ₹146 crore for a project and project on a

property identified in the DTD as land situated in Sector 88 B area Comp. App. (AT) (Ins.) Nos. 266 of 2026 56 of 58 admeasuring to 12.212 acres, and the securities provided to the

Debenture Trustees were with respect to the project in question.

VI. In the facts of the present case, CIRP against the corporate debtor ought

to have been confined only to the project in question 'Aspirations' and

the CIRP cannot be extended to other projects of the corporate debtor,

situated in state of Haryana and other places.

Question No. (VII)

65. In view of the foregoing discussions and our conclusions, we dispose of

the appeal in following manner:

i. The Debenture Trustee having proved the debt and default, initiation of

CIRP against the corporate debtor by order dated 03.02.2026 cannot be

faulted. However, CIRP against the corporate debtor is to confine to

only project situated in Sector 88 B, Gurgaon, 'Project Aspirations', the

order dated 03.02.2026 is modified to that extent.

ii. The IRP who was permitted to collate the claims after issuance of

publication may issue revise updated publication consequent to this

order. However, date of commencement of the CIRP shall remain same

i.e., 03.02.2026, requiring updation of the claim, along with proof of the

claims by the stakeholders of the 'Project Aspirations'.

iii. The IRP to proceed in the CIRP process with respect to above project in

accordance with law.

Comp. App. (AT) (Ins.) Nos. 266 of 2026 57 of 58 iv. The financial creditors in class, financial institutions and other

creditors of other projects of the corporate debtor are at liberty to take

such remedy as available in law including proceedings under Section 7

of the IBC.

Parties shall bear their own costs.

All IAs are disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

27th March, 2026

himanshu

Comp. App. (AT) (Ins.) Nos. 266 of 2026 58 of 58