NEW DELHI: In a major relief to real estate firm Mahagun, the National Company Law Appellate Tribunal (NCLAT) has quashed the insolvency proceedings against the Tribunal and directed the NCLT to rehear the petition in view of the fresh status report filed with the Tribunal on the projects.A two-judge bench of the appellate court said the NCLT should have taken into account the Supreme Court’s directions in the Mansi Brar Fernandes case, which held that real estate insolvency had to be project-specific.
Moreover, the NCLAT also noticed an intervention application filed by several groups of home buyers of other projects of Mahagun, where they prayed to set aside the NCLT order imposing insolvency against the real estate company.
Some of them also suggested that the Corporate Insolvency Resolution Process (CIRP) against Mahagun should be pursued, with some group members arguing that this should be limited to the Mahagun Manorialle project only.In this case, Aditya Birla Capital Ltd (ABCL) has also filed an intervention stating that it has advanced financing to Mahagun for four other projects, which are operational, and that there is no default.
The Delhi-based bench of the National Company Law Tribunal (NCLT) on August 5, 2025 approved the insolvency petition filed by IDBI Trusteeship Services Ltd against Mahagun over a default of Rs 256.48 crore in repayment of bonds by the real estate company.
This was challenged by a member of the suspended Mahagun board before the court of appeal.
Considering the submissions, the NCLAT said, “Order dated August 5, 2025 is set aside and petition IB112(ND)/2025 is re-submitted to the Adjudicating Authority for fresh consideration.”
The NCLAT also granted Mahagun India a week’s time to file a detailed reply to the insolvency petition filed under Section 7 of the IBC, with a status report filed with it.
“Both parties are given liberty to place this order before the Adjudicating Authority (NCLT) and request that a date be fixed in the Section 7 petition, after two weeks, for hearing and consideration. No further opportunity is given to the CD to file a reply,” said the 39-page NCLAT order passed on Thursday.
The NCLAT bench comprising Chairman Justice Ashok Bhushan and Barun Mitra, Member (Technical), also granted liberty to Aditya Birla Capital Ltd to file a fresh intervention petition in the Section 7 petition to be considered and decided by the judicial authority in accordance with law.
Aditya Birla Capital is the financial creditor of four real estate and commercial projects in Delhi and NCR, namely Mahagun Metro Mall, Hotel Sarovar Portico, Mahagun Montage and Hotel Park Plaza, which have been exclusively pledged to it by the real estate company.
The NCLAT has also granted similar relief to home buyers by granting them, who have filed IAs in these appeals, the liberty to file an intervention application before the NCLT, which may also be considered by them in accordance with law.
The Court of Appeal also clarified that it “has not expressed any view on the merits of the Section 7 petition and the intervention applications”, saying that “it is for the Adjudicating Authority to consider and decide”.
Mahagun had defaulted on bond repayment on September 30, 2023. The IDBI Trusteeship Services issued a recall/default notice on February 20, 2024 and on April 17, 2024. Later, it approached the NCLT and claimed a default of Rs 256.48 crore, praying for the start of CIRP.
The real estate company had challenged the enforceability of the IDBI Trusteeship plea and sought time to file a detailed reply. The NCLT did not accept the request and agreed by order on the same date, after giving the parties liberty to file written submissions, limiting the arguments reserved in the order.
On August 4, 2025, Mahagun filed a motion for a stay of judgment. The filing alleged that there are other projects by real estate company CD with more than 6,000 homebuyers.
It was also stated that in the event of a two-week extension, Mahagun will complete the settlement process and avoid the need for judgment in the company’s petition.
However, the NCLT issued an order allowing bankruptcy proceedings against Mahagun and appointed an Interim Resolution Professional, suspending the company’s board.
The NCLT held that Mahagun did not deny the fault and default and there is a disclosure record stating the default. It ruled that there was an acknowledged breach of contract; therefore the request should be accepted.
The said order was challenged by Amit Jain, Director, Suspended Board of Mahagun (India), before the NCLAT, which set aside the order.
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