NCLT Orders Insolvency Against Essel Infraprojects Over ₹87.43-Crore Default

Mumbai's National Company Law Tribunal (NCLT) has ordered the initiation of a Corporate Insolvency Resolution Process (CIRP) against Essel Infraprojects Limited (ESL) over a ₹87.43-crore default.

The order was passed by the NCLT Mumbai Bench on August 24, 2026, in a petition filed by Jammu and Kashmir Bank Limited under Section 7 of the Insolvency and Bankruptcy Code (IBC). The bank had claimed a default of ₹87.43 crore, including interest and legal charges, with the underlying default dating back to October 2019.

The dispute centred on a ₹200-crore line of credit facility sanctioned by the bank to Pan India Utilities Distribution Company Limited (PIUDCL) in December 2013. Essel Infraprojects had furnished a corporate guarantee for the facility and had also mortgaged 196.16 acres of land at Gorai, Borivali, as security.

According to the bank, ₹125 crore was disbursed on December 28, 2013, and the remaining ₹75 crore on December 30, 2013. The outstanding principal was stated to be ₹69.96 crore, while interest and other charges took the total claim to ₹87,43,17,925.37.

The NCLT observed that Essel Infraprojects remained liable under the corporate guarantee furnished to Jammu and Kashmir Bank, despite the company's arguments that it had ceased to own the Gorai property following a demerger scheme sanctioned by the Bombay High Court in April 2014.

The property was subsequently transferred to another group entity, Pan India Infraprojects Private Limited (PIIPL), following a merger scheme sanctioned in June 2014. However, the NCLT held that the corporate guarantee dated December 27, 2013, would continue to bind Essel Infraprojects until the underlying loan liability is fully discharged.

The bank had issued a demand notice to PIUDCL in January 2019, which subsequently admitted the debt and sought additional time, citing liquidity problems. It was later admitted into CIRP in September 2019. The bank then invoked the corporate guarantee furnished by Essel Infraprojects and demanded payment from the company.

Essel Infraprojects opposed the insolvency petition, but the NCLT upheld the corporate guarantee, stating that the company had failed to establish any subsequent transaction that discharges the guarantor.

The initiation of CIRP against Essel Infraprojects is a significant development in the case, and it remains to be seen how the company will respond to the order. The NCLT's decision is likely to have implications for other companies that have furnished corporate guarantees for loans.

In the context of India's insolvency and bankruptcy landscape, the NCLT's order highlights the importance of corporate guarantees and the liabilities that come with them. The case also underscores the need for companies to carefully consider their financial obligations and the potential consequences of defaulting on loans.

The outcome of the case will be closely watched by stakeholders, including creditors, investors, and industry experts. As the CIRP process unfolds, it is likely to have significant implications for Essel Infraprojects and its stakeholders.

In conclusion, the NCLT's order initiating CIRP against Essel Infraprojects is a significant development in the case, and it highlights the importance of corporate guarantees and the liabilities that come with them. The case is likely to have implications for other companies that have furnished corporate guarantees for loans, and it underscores the need for companies to carefully consider their financial obligations and the potential consequences of defaulting on loans.