NCLAT Ends Insolvency Proceedings Against Embassy Development

by- Zaid
May 5, 2026

The National Company Law Appellate Tribunal has overturned a lower court's decision to start insolvency proceedings against realty firm Embassy Development. The tribunal ruled that the case was barred by Section 10A of the IBC, which prevents proceedings for defaults occurring after March 25, 2020.

New Delhi, May 5: The NCLAT has set aside an NCLT order that allowed insolvency proceedings against Embassy Development.

Background

The Delhi bench of NCLT, in December 2025, directed insolvency proceedings against the realty firm over a plea by Canara Bank. The bank alleged Embassy Development owed Rs 200 crore as a corporate guarantor for a loan given to Indiabulls Realtech (now Simar Thermal Power).

NCLAT Ruling

The appellate tribunal said the default alleged by Canara Bank was "within Section 10A period" of the IBC. Section 10A bars corporate insolvency for any default arising on or after March 25, 2020, for one year – a COVID-19 protection measure.

"The Adjudicating Authority committed error in not accepting the plea that the application was barred by Section 7," the NCLAT said in its 43-page order.

Timeline of Dispute

February 2010: Canara Bank sanctioned Rs 100 crore term loan to Indiabulls Realtech
September 28, 2017: Loan account classified as NPA
September 2020: Canara Bank issued recall notice
2025: Bank filed Section 7 application claiming Rs 202.03 crore

Court's Criticism

The NCLAT slammed the bank for rushing to file a petition without looking at the Deed of Guarantee and other documents.

"The Financial Creditor rushed to file Section 7 application in a casual and callous manner which is disapproved," the NCLAT observed.