Canara Bank Secures NCLT Nod for Insolvency Proceedings Against Equinox India Developments

NCLT admits insolvency plea against Equinox India Developments for defaulting on a Rs. 372 crore financial obligation, initiates Corporate Insolvency Resolution Process.

In a significant development, the National Company Law Tribunal (NCLT), New Delhi Bench, has admitted the application filed by Canara Bank, formerly known as E-Syndicate Bank, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s Equinox India Developments Limited. The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, citing a financial default of Rs. 372.35 crore. The judgment was delivered on December 9, 2025, by a bench comprising Shri Manni Sankariah Shanmuga Sundaram and Shri Atul Chaturvedi.

The case stems from Equinox India Developments standing as a corporate guarantor for a series of financial facilities availed by Sinnar Thermal Power Limited, the principal borrower, from a consortium of banks. The total credit facilities amounted to Rs. 144.40 crore, and the borrower's account was classified as a non-performing asset (NPA) on September 28, 2017.

The tribunal observed that the corporate debtor's liability as a guarantor is co-extensive with that of the principal borrower, as per Section 128 of the Indian Contract Act. Despite multiple acknowledgments of debt and one-time settlement proposals by the principal borrower and its promoters, the liabilities remained unpaid. The tribunal noted that the financial creditor had provided sufficient evidence of default through certified account statements and auditor's reports.

The NCLT rejected the corporate debtor's contention that the default occurred during the suspension period under Section 10A of the Insolvency and Bankruptcy Code, which protects defaults occurring between March 25, 2020, and March 24, 2021, from CIRP initiation. It was established that the default originated prior to the suspension period, and hence, Section 10A was not applicable.

Additionally, the tribunal dismissed claims of novation and discharge of guarantee obligations, stating that there was no executed release or unconditional discharge of the corporate guarantee. The tribunal also emphasized that restructuring schemes do not automatically extinguish existing guarantees without explicit creditor consent.

The NCLT has appointed Mr. Prabhat Ranjan Singh as the Interim Resolution Professional to oversee the insolvency proceedings. A moratorium under Section 14 of the Insolvency and Bankruptcy Code has been declared, prohibiting the institution or continuation of suits, the transfer of assets, and the enforcement of security interests against the corporate debtor during the resolution process.

This decision marks a pivotal step in the insolvency resolution process, providing a structured approach to address the financial distress of Equinox India Developments, while upholding the claims of the financial creditors involved.

Bottom Line:

Corporate Insolvency Resolution Process (CIRP) initiated against Corporate Guarantor based on default of Principal Borrower under Section 7 of the Insolvency and Bankruptcy Code, 2016. Moratorium declared in terms of Section 14 of the Code.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 7, 10A, 128 of the Indian Contract Act, Limitation Act, 1963 Section 18, Insolvency and Bankruptcy Code, 2016 Section 14.

Canara Bank (E-Syndicate Bank) v. M/s Equinox India Developments Limited, (NCLT)(New Delhi Bench) : Law Finder Doc Id # 2820400