In a sharp rebuke that raises serious questions over judicial consistency, the national company law appellate tribunal (NCLAT) has flagged contradictory rulings delivered by the same national company law tribunal (NCLT) bench on identical facts in two insolvency petitions filed by Canara Bank.
The appellate tribunal noted that on 9 December 2025, NCLT’s New Delhi bench (Court – IV) passed 'divergent judgements' in two Section 7 cases arising from the same loan transaction, involving the same borrower, the same set of guarantees and even the same loan recall notice. While the NCLT admitted Canara Bank’s insolvency plea against Embassy Developments Ltd, it dismissed a parallel petition against RattanIndia Enterprises Ltd—another corporate guarantor—on the very same day.
Both matters stemmed from financial facilities extended to Indiabulls Realtech Ltd, now known as Sinnar Thermal Power Ltd, for a power project, and were triggered by a common recall notice issued on 30 September 2020. Notably, both orders were delivered by the same coram comprising judicial member Mani Sankariah Shanmugasundaram and technical member Atul Chaturvedi.
“Giving two divergent judgments by the same Bench on the same date is unexplainable and un-understandable,” NCLAT observed, underscoring the gravity of the inconsistency. “Same (NCLT) bench having taken the view that there is no financial debt with regard to one Corporate Guarantor, i.e. RattanIndia Enterprises. The same bench in the impugned order has admitted a Section 7 application, which arose out of the same facts and same debt and pleadings with regard to another corporate guarantor. We fail to see that when against one corporate guarantor Section 7 application was rejected, holding that there is no financial debt how on the same debt and same loan recall notice, a Section 7 application can be admitted against another corporate guarantor, which shows clear non-application of mind by the adjudicating authority to the facts of the case. The impugned order dated 9 December 2025 is thus, clearly vitiated due to nonapplication of mind.”
“Giving two divergent judgments by the same bench on the same date is unexplainable and un-understandable. Learned technical member who has authored the impugned judgment failed to notice the judgment of the same bench delivered on the same day, disregarding the reasons given in the judgment dated 9 December 2025 in CP (IB) No. 204/ND/2025 that there is no financial debt, is another reason on which the impugned judgment cannot be sustained,” NCLAT says.
The appellate proceedings arose from a challenge to the NCLT’s decision admitting insolvency proceedings against Embassy Developments. During the hearing, the appellate tribunal took note of the conflicting treatment of two corporate guarantors under the same transaction.
In the case of RattanIndia Enterprises, NCLT had held that no financial debt existed based on the same guarantee framework, leading to dismissal of the petition. However, in the case of Embassy Developments, the same bench reached the opposite conclusion and admitted the plea, initiating the corporate insolvency resolution process.
NCLAT found this divergence difficult to reconcile, especially since both petitions relied on identical facts, documents and legal grounds. It observed that such inconsistency points to a clear lack of uniform application of mind and raises concerns about adjudicatory discipline.
Examining the merits, the appellate tribunal also noted that the original corporate guarantee dated 30 June 2010 primarily obligated the guarantor to infuse equity into the project rather than repay the principal borrower's debt. It further observed that a subsequent guarantee executed on 11 January 2012 had altered the liability structure by substituting guarantors, effectively discharging the original corporate debtor except under limited circumstances.
The tribunal also highlighted that the loan recall notice invoking the guarantee was issued on 30 September 2020 which falls within the period covered under Section 10A of the Insolvency and Bankruptcy Code. This provision bars the initiation of insolvency proceedings for defaults arising during the COVID-19 suspension window. It reiterated that for a corporate guarantor, the date of default arises only upon invocation of the guarantee, and not when the principal borrower’s account is classified as a non-performing asset.
In its interim observations, NCLAT noted that the insolvency proceedings initiated against Embassy Developments appeared to be hit by the Section 10A bar and stayed NCLT’s admission order.
The ruling brings into focus the importance of consistency in insolvency adjudication, particularly in cases involving multiple guarantors under the same financial arrangement. By terming the conflicting orders as ‘unexplainable’, the appellate tribunal has signalled that such divergences could undermine confidence in the insolvency framework and the credibility of judicial outcomes.
(Company Appeal (AT) (Insolvency) No. 1964 of 2025 Date: 4 May 2026)
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