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Informist, Tuesday, Dec. 9, 2025

 

--NCLT admits Canara Bank's insolvency plea against Embassy Developments

 

By Surya Tripathi

 

NEW DELHI – The Delhi bench of the National Company Law Tribunal Tuesday admitted Canara Bank's plea to start insolvency proceedings against Embassy Developments Ltd., formerly known as Equinox India Developments Ltd., which was corporate guarantor for facilities advanced to principal borrower Sinnar Thermal Power Ltd. The tribunal appointed Prabhat Ranjan Singh as the interim resolution professional of Embassy Developments to carry out the functions as per the Insolvency and Bankruptcy Code, 2016.

 

The deed of guarantee between the parties in 2012 clearly mentions that Embassy Developments will be responsible for fulfilling obligations in the event of a default by substituted guarantors, the tribunal said, rejecting the company's argument that a scheme of arrangement entered into among it, RattanIndia Enterprises Ltd., Indiabulls Builders, RattanIndia Power Ltd., and Poena Power Supply Ltd., meant that its obligations as corporate guarantor stood discharged or novated. A restructuring scheme does not "ipso facto" extinguish existing guarantees unless the creditor expressly executes a written and unconditional release in favour of the guarantor, the tribunal said.

 

Canara Bank had said Embassy Developments was the guarantor for loans advanced to Sinnar Thermal, which was indebted to the bank for an aggregate amount of INR 3.72 billion, not including penalties and interest. A consortium of banks, which included Canara Bank, had sanctioned loans to Sinnar Thermal in 2010, 2014, and 2016. The other members of the consortium were Power Finance Corp. Ltd., REC Ltd., Life Insurance Corp. of India, Bank of India, Axis Bank Ltd., and Punjab National Bank.

 

As Sinnar Thermal defaulted on repayment of the loans, its account was declared a non-performing asset in 2017, after which loan recall notices were issued. Canara Bank said Embassy Developments was corporate guarantor by virtue of various undertakings and documents executed, such as the corporate guarantee, cost overrun deed of undertaking, deed of indemnity-cum-undertaking, share retention, and management undertaking and promoters' deeds of undertaking. These instruments, read collectively, were evidence of the company's unequivocal obligation to ensure repayment of the loans and therefore amounted to a corporate guarantee within the meaning of the 2016 Code, the bank said.

 

Last month, the tribunal had approved an INR-38-billion resolution plan by a consortium of Maharashtra State Power Generation Co. Ltd. and NTPC Ltd. for the debt-ridden Sinnar Thermal. The tribunal had admitted Shapoorji Pallonji & Co. Pvt. Ltd.'s plea to start insolvency proceedings against Sinnar Thermal in 2022.

 

Tuesday, shares of Embassy Developments ended 3% higher at INR 69.73 on the National Stock Exchange. Shares of Canara Bank ended 2.4% higher at INR 146.19.  End 

 

Edited by Rajeev Pai

 

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