Mumbai, May 18: The National Company Law Tribunal (NCLT) has admitted an insolvency petition filed by Canara Bank against Supreme Housing and Hospitality Private Limited over an alleged default of more than Rs 567 crore. The tribunal also rejected an interlocutory application filed by the corporate debtor seeking dismissal of the insolvency proceedings.
“There exists a debt which is in default and the said debt is within limitation and exceeds the threshold prescribed under Section 4 of IBC, 2016. The present Application is complete, and as per the consent of the proposed IRP as placed on record, no disciplinary proceedings are pending against the said proposed IRP. In view of the above, we are left with no choice but to order the commencement of the Corporate Insolvency Resolution Process on the Corporate Debtor (CD). We make it clear that at this stage we have not crystallised the amount as claimed in this Application; the same is left to be collated by the IRP,” the order copy reads.
Canara Bank cites Rs 567 crore default
The petition was filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) before the NCLT.
According to the order, the financial creditor claimed a default amount of Rs 567,43,40,067.80 as on October 31, 2025, out of which the principal outstanding was Rs 175.83 crore while interest amounted to Rs 391.60 crore.
The tribunal noted that the company had availed a term loan facility of Rs 390 crore from the bank in 2014. The loan was repayable in 108 structured monthly instalments. However, the account was classified as a Non-Performing Asset (NPA) on September 29, 2017, after the borrower allegedly failed to service the debt.
Company opposed insolvency proceedings
The company opposed the insolvency plea, arguing that proceedings initiated against personal guarantors under Section 95 of the IBC triggered a moratorium under Section 96, thereby barring parallel insolvency proceedings against the corporate debtor.
It further contended that the bank had waived the earlier default by accepting the OTS proposals and that the subsequent financial distress was aggravated after the company and its promoters were declared wilful defaulters, which allegedly impacted their ability to raise funds.
Tribunal rejects company’s arguments
However, the financial creditor argued that the liabilities of personal guarantors and the corporate debtor arise from separate and independent contracts, and therefore the moratorium applicable to guarantors could not extend to proceedings against the borrower company.
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The bank relied on various judicial precedents, including the Supreme Court judgment in Lalit Kumar Jain v. Union of India.
The NCLT ultimately proceeded with the insolvency petition and also considered the bank’s request for appointment of an Interim Resolution Professional (IRP).
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