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The National Company Law Appellate Tribunal (NCLAT) has directed the withdrawal of insolvency proceedings against real estate developer Mahagun (India) after it reached a settlement with financial creditor IDBI Trusteeship Services under an agreement signed earlier this month. The tribunal dismissed the insolvency petition and all pending applications, while allowing the creditor the option to revive proceedings if Mahagun fails to comply with settlement terms. The case arose from a default of INR 256.48 crore linked to non-convertible debentures issued for Mahagun's Manorialle project in Noida, which had faced legal and construction challenges.
The National Company Law Appellate Tribunal (NCLAT) has ordered the withdrawal of insolvency proceedings against Mahagun (India) following a settlement with IDBI Trusteeship Services. The settlement, signed earlier this month, resolved disputes related to financial obligations on non-convertible debentures issued for the Mahagun Manorialle project in Noida. IDBI Trusteeship, the financial creditor, applied to withdraw its insolvency petition after the agreement. Advertisement
The tribunal noted that all pending applications related to the case are now disposed of. However, it granted IDBI Trusteeship the right to revive the insolvency proceedings if Mahagun does not fulfill the settlement terms. This ensures legal protection for the creditor while allowing the developer to continue project execution without the ongoing insolvency burden.
The insolvency case had originated when IDBI Trusteeship filed a Section 7 application at the National Company Law Tribunal (NCLT), alleging a default of INR 256.48 crore on non-convertible debentures. These debentures were linked to the Mahagun Manorialle residential project, comprising six 40 floor towers with premium apartments. Legal disputes over the project had earlier affected construction progress and delivery timelines.
Over the past year, Mahagun had challenged the initial insolvency admission, which led to the NCLAT setting aside an earlier NCLT order and directing a fresh hearing. With the current settlement, the company and its creditor have resolved their differences, though the creditor retains the right to initiate proceedings if the terms are not met. This step is expected to bring stability and clarity to the project, helping Mahagun focus on completing construction and meeting obligations to buyers and stakeholders.
The development also reflects the growing trend of resolving disputes outside insolvency to maintain project continuity in the real estate sector. Analysts say such settlements can prevent project delays and financial losses while ensuring accountability for both developers and creditors.
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