NCLAT Upholds CIRP Against Parsvnath Developers, Finds Debt And Default Proved Despite Settlement Efforts

The National Company Law Appellate Tribunal (NCLAT) at Delhi has dismissed appeals filed by the suspended directors of Parsvnath Developers Limited and its corporate guarantor, Noida Marketing Pvt. Ltd. It upheld orders admitting both companies into the corporate insolvency resolution process (CIRP), finding that debt and default stood proved.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra held,

“Default on the part of the corporate debtor is well proved from the material brought on the record, even on admission and various efforts made by the corporate debtor before the Delhi High Court as well as before the NCLT to bring on record settlement with the financial creditor in which he failed are ample proof of debt and default on the part of the corporate debtor.”

The appeals were filed by Sanjeev Kumar Jain, suspended director of Parsvnath Developers Limited, and Surya Mani Pandey, suspended director of Noida Marketing Pvt. Ltd. They challenged orders passed by the Delhi bench of the National Company Law Tribunal (NCLT) on April 30, 2026 and April 24, 2026, respectively, admitting CIRP against the two companies.

Parsvnath Developers Limited had obtained multiple loan facilities from Sammaan Capital Limited beginning in 2018.

In July 2024, Sammaan Capital moved an insolvency plea against Parsvnath Developers, claiming a default of about ₹942.26 crore. A few months later, the debt was assigned to Asset Reconstruction Company (India) Ltd. (ARCIL).

The dispute appeared headed for a settlement in February 2025. Parsvnath Developers handed over demand drafts worth ₹75 crore and assured the lender that the balance amount would be paid in line with a mutually discussed repayment schedule. The insolvency proceedings were withdrawn at that stage, though the creditor retained the right to seek their revival if the arrangement did not work out.

That is eventually what happened. ARCIL returned to the NCLT seeking restoration of the insolvency proceedings, and on August 20, 2025, the tribunal allowed the request.

Before the appellate tribunal, the suspended directors maintained that the company had honoured the settlement and remained willing to make payments as agreed. Their case was that negotiations never truly broke down on their side and that ARCIL had stepped away from the proposed arrangement even as discussions over repayment continued.

They also pointed to the amounts already paid during the course of the dispute. According to the appellants, insolvency proceedings were being pressed into service as a tool for recovery of dues rather than for resolving insolvency.

ARCIL opposed the appeals, submitting that debt and default were clearly established. It pointed out that in proceedings initiated by the corporate debtor before the Delhi High Court, the debtor had acknowledged outstanding instalments and undertaken to deposit ₹75 crore. Of this amount, only ₹25 crore was deposited with the court registry.

The Resolution Professional informed the appellate tribunal that claims worth about ₹800 crore had been received from homebuyers.

The NCLAT noted that the NCLT had deferred pronouncement of its order on more than one occasion. This was done after being informed that the parties were attempting to settle the dispute.

The appellate tribunal observed that these requests themselves demonstrated that the corporate debtor was seeking time to arrive at a settlement with the financial creditor.

“The above statements recorded by the NCLT while deferring the pronouncement clearly indicates that default by the corporate debtor is not even contested rather corporate debtor was praying for deferring the pronouncement in the hope of settlement to be entered with the financial creditor.”, it noted.

The tribunal also noted that the corporate debtor had admitted in its pleadings that an amount of ₹489.32 crore remained payable. At the same time, it had raised certain counterclaims.

Relying on the Supreme Court's decision in B. Prashanth Hegde v. State Bank of India, the NCLAT held that questions relating to set-off and counterclaims are matters to be considered during the claims process. Such claims do not detract from an admitted debt and default at the stage of admission of insolvency proceedings.

The tribunal further held that the admission of CIRP against Noida Marketing Pvt. Ltd. could not be faulted. It noted that the principal borrower had committed default and recall notices had already been issued to the corporate guarantor.

Finding no grounds to interfere with the NCLT's orders dated April 24 and April 30, 2026, the NCLAT dismissed both appeals.