Hypothecators Liable as Corporate Guarantors for Rs. 250+ Crore Debt: NCLT Admits Insolvency Pleas Against Group Companies

The National Company Law Tribunal (NCLT), New Delhi Bench, has dealt with a batch of insolvency petitions against multiple group companies of a real estate conglomerate and held that the hypothecators are liable as corporate guarantors for Rs. 250+ Crore debt. The bench of Ashok Kumar Bhardwaj (Judicial Member) and Reena Sinha Puri (Technical Member) has observed that the hypothecation deed expressly obligated the corporate debtors to ensure repayment of the borrower’s dues. The covenant required the hypothecators to “cause the borrower to pay/repay the borrower’s dues” and to perform all obligations under the loan documents. The issue raised was whether entities that executed a Deed of Hypothecation can be treated as “corporate guarantors” and proceeded against under Section 7 of the IBC. The petitions arose out of loan facilities originally extended by Samman Capital Limited (formerly Indiabulls Housing Finance Ltd.) to a principal borrower, Bliss House Pvt. Ltd., along with other group entities. These loans, amounting to over ₹175 crore across different agreements, were secured through personal guarantees, hypothecation of receivables, and other security documents. The financial facilities were sanctioned in 2018–2019, with repayment obligations structured through equated monthly instalments. The corporate debtors—various group entities—had executed a Deed of Hypothecation, thereby creating security interests in favour of the lender. The loan agreements also contained clauses providing that all obligors, including guarantors, hypothecators, and pledgors, would be jointly and severally liable in case of default. In March 2020, the lender recalled the loans, citing a “Material Adverse Effect” arising from criminal investigations involving the promoters, which allegedly impacted their repayment capacity. Despite the borrowers’ objections and claims of regular interest payments, the lender proceeded with arbitration. An arbitral award dated February 28, 2023, crystallised the liability at approximately ₹196 crore along with interest. Subsequently, the debt was assigned to J.C. Flowers Asset Reconstruction Pvt. Ltd. through an assignment agreement executed on March 29, 2025. The assignee then issued demand notices and initiated insolvency proceedings against the corporate debtors, alleging default exceeding ₹250 crore. The central question before the Tribunal was whether the corporate debtors—who had merely executed a Deed of Hypothecation and were not primary borrowers—could be treated as “corporate guarantors” and thus be subjected to insolvency proceedings under Section 7 of the IBC. The respondents argued that execution of a hypothecation deed does not automatically make them financial debtors or guarantors. They further contended that there was no default at the time of loan recall, that the arbitral award was under challenge before the High Court, and that the insolvency petitions were essentially an attempt to enforce the award. Rejecting the objections raised by the corporate debtors, the NCLT undertook a detailed analysis of the loan documents and the Deed of Hypothecation. It noted that the definition of “obligor” under the loan agreements included not only borrowers but also hypothecators, guarantors, mortgagors, and any person providing security for the loan. On this basis, the Bench held that the corporate debtors had effectively undertaken liability akin to a guarantee. It observed that by standing as security providers and agreeing to discharge the borrower’s obligations, they fell within the scope of “corporate guarantor” under the IBC. The Tribunal also took note of the arbitral award, which had crystallised the debt and established default. It held that the pendency of a challenge under Section 34 of the Arbitration Act does not negate the existence of debt or default for the purposes of IBC proceedings. Further, the assignment of debt in favour of J.C. Flowers Asset Reconstruction Pvt. Ltd. was recognized as valid, enabling the assignee to step into the shoes of the original lender and initiate insolvency proceedings. Case Details Case Title: J.C. Flowers Asset Reconstruction Pvt. Ltd. Versus Imagine Habitat Private Limited Citation: JURISHOUR-761-HC-2026(Ker) Case No.: C.P.(IB) – 30/ND/2026 Date: 07.04.2026 Counsel For Petitioner: Adv. Sidhant Kumar Marwah Counsel For Respondent: Sr. Adv. Sunil Fernandes Click Here To Read Order Read More: No Tax Liability? Filing ITR for AY 2026–27 Still Makes Strategic Sense

Hypothecators Liable as Corporate Guarantors for Rs. 250+ Crore Debt: NCLT Admits Insolvency Pleas Against Group Companies

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