NCLT Initiates Insolvency Proceedings Against ERA Infrastructure, Upholds Financial Creditor's Claim

National Company Law Tribunal admits CIRP application filed by National Asset Reconstruction Company Limited against ERA Infrastructure for default on financial debt.

In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Bench, has admitted the application filed by National Asset Reconstruction Company Limited (NARCL) to initiate the Corporate Insolvency Resolution Process (CIRP) against ERA Infrastructure (India) Ltd. The tribunal, comprising Judicial Member Shri Manni Sankariah Shanmuga Sundaram and Technical Member Shri Atul Chaturvedi, delivered its decision on November 4, 2025, following a detailed hearing of the matter.

The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) was filed by NARCL, acting as the financial creditor, due to a default in the repayment of a financial debt amounting to Rs. 385.38 crore. This debt comprised a principal amount of Rs. 143.75 crore and interest of Rs. 241.62 crore, which was acknowledged by the corporate debtor, ERA Infrastructure, through its balance sheets and other communications.

The tribunal noted that the debt was originally extended by the Bank of India under three term loans secured by a corporate guarantee provided by ERA Infrastructure. These loans were subsequently assigned to NARCL through an Assignment Agreement, allowing NARCL to step into the shoes of the original creditor and pursue recovery under the IBC.

In its order, the NCLT emphasized the procedural compliance with the requirements of the IBC, including the existence of a financial debt, default, and the submission of requisite documents, leading to the admission of the CIRP application. The tribunal appointed Mr. Alok Kumar Agarwal as the Interim Resolution Professional (IRP) to manage the resolution process.

Furthermore, the NCLT imposed a moratorium as per Section 14 of the IBC, which restricts the institution of suits, transfer of assets, and recovery actions against ERA Infrastructure during the insolvency process, while ensuring the continuation of essential services.

The tribunal addressed objections raised by ERA Infrastructure regarding the limitation period and procedural irregularities, citing acknowledgments of debt under Section 18 of the Limitation Act that extended the limitation period. The tribunal concluded that the application was filed within the permissible timeframe and dismissed any contention of procedural impropriety.

This decision reinforces the IBC's framework for resolving financial distress and underscores the tribunal's role in facilitating the insolvency process to ensure the financial stability of debt-laden corporations.

Bottom Line:

Corporate Insolvency Resolution Process (CIRP) - Application under Section 7 of Insolvency and Bankruptcy Code, 2016 filed by Financial Creditor based on default in financial debt by the Corporate Debtor - Financial debt established through Term Loans I, II, and III along with Corporate Guarantee furnished by Corporate Debtor - Debt acknowledged in balance sheets and correspondence extending limitation period under Section 18 of Limitation Act - CIRP initiated.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 7, 14, 18; Limitation Act, 1963 - Section 18; Companies Act, 1956; SARFAESI Act, 2002; Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016

National Asset Reconstruction Company Limited v. ERA Infrastructure (India) Ltd., (NCLT)(New Delhi Bench) : Law Finder Doc Id # 2807186