Supreme Court Issues Notice In Canara Bank's Plea Against NCLAT Order Setting Aside Insolvency Admission Of Equinox India Developments

The Supreme Court on Monday issued notice on Canara Bank's challenge to the NCLAT order setting aside the admission of its Section 7 insolvency petition against Equinox India Developments Ltd., formerly Indiabulls Real Estate Ltd.

A Bench of Justices J.B. Pardiwala and K. Vinod Chandran said the matter requires consideration and issues notice in Canara Bank's special leave petition.

The case arose from Canara Bank's insolvency proceedings against Equinox India Developments Ltd, formerly Indiabulls Real Estate Ltd., based on a corporate guarantee furnished in connection with loans extended to Indiabulls Realtech Ltd, later Sinnar Thermal Power Ltd., for a power project in Nashik, Maharashtra.

Canara Bank had sanctioned a ₹100 crore term loan in 2010, followed by cost overrun facilities, taking the total exposure to about ₹144.4 crore.

The bank later issued a recall notice demanding ₹202 crore from the corporate debtor and other guarantors, and the NCLT admitted its Section 7 application on December 9, 2025.

The appellant, a suspended director of Equinox India Developments, challenged the admission, arguing that the 2010 corporate guarantee was limited to equity infusion and cost-overrun obligations and did not guarantee repayment of the principal borrower's debt. He also relied on a 2012 guarantee deed, which substituted new guarantors and released the corporate debtor except in limited circumstances.

The NCLAT held that the guarantee did not constitute financial debt under Section 5(8) of the IBC and that no default in the guaranteed obligation had been established. It further held that the guarantee was invoked on September 30, 2020, during the Section 10A period, making the insolvency proceedings unsustainable. The NCLAT therefore allowed the appeal and set aside the NCLT's admission order.