New Delhi, January 07, 2026 : The National Company Law Appellate Tribunal (NCLAT), New Delhi, has declined to set aside the initiation of insolvency proceedings against Ansal Properties and Infrastructure Limited, but has substantially restricted their scope. The appellate tribunal has ruled that the Corporate Insolvency Resolution Process (CIRP) must be confined only to those real estate projects which are directly connected to the loan securities and receivables, instead of extending across the company’s entire portfolio.
The decision was delivered by a Bench comprising Judicial Member Justice Ashok Bhushan and Technical Member Barun Mitra while deciding appeals filed by suspended director Pranav Ansal and homebuyer Gagan Tandon. These appeals challenged an order passed by the National Company Law Tribunal (NCLT), New Delhi, which had admitted a Section 7 application under the Insolvency and Bankruptcy Code, 2016, and imposed a company-wide moratorium.
The dispute traces back to two term loans aggregating ₹150 crore extended in 2016 by IL&FS Financial Services Limited to Ansal Properties. The loans were primarily sanctioned for the development of hi-tech township projects, with a significant focus on the Mother City project at Lucknow. Following defaults in repayment, IL&FS recalled the loan facilities and raised claims exceeding ₹257 crore, ultimately approaching the NCLT for initiation of insolvency proceedings.
By its order dated February 25, 2025, the NCLT admitted the insolvency application, imposed a moratorium under Section 14 of the Code over the entire company, and appointed an interim resolution professional. This blanket moratorium sparked concern among homebuyers and development authorities, who apprehended that construction activity and handover of possession would come to a standstill even in projects that were financially viable and unconnected with the underlying debt.
Before the NCLAT, the appellants argued that Ansal Properties had more than 90 registered projects in Lucknow alone, in addition to large developments in Agra, Ghaziabad, Mohali and other cities. They contended that subjecting the entire company to insolvency for defaults linked to specific projects would freeze otherwise viable developments and unfairly prejudice thousands of homebuyers who had already invested substantial sums and were awaiting possession.
IL&FS opposed any curtailment of the insolvency proceedings and maintained that the loans were sanctioned for broader corporate purposes, including infrastructure development of the Lucknow township. On this basis, it was argued that the CIRP ought to extend to the entire corporate debtor and not be restricted to a few identified projects.
The appellate tribunal did not accept the plea to quash the insolvency proceedings altogether, noting that the existence of debt and default was not disputed. However, after examining the loan agreements and security documents, the NCLAT found that the securities and hypothecated receivables were clearly identified and tied to specific projects. The tribunal observed that extending insolvency proceedings to unrelated projects would be unwarranted and could seriously disrupt developments that were otherwise viable.
Relying on the project-specific or “reverse CIRP” approach evolved in real estate insolvency cases, the Bench held that where loan agreements specify particular securities, the insolvency process must be confined to those projects alone. It emphasised that insolvency law should not be applied in a manner that paralyses unrelated projects and causes avoidable hardship to homebuyers.
Accordingly, the NCLAT ruled that the CIRP against Ansal Properties would apply only to Sushant Golf City at Lucknow and the three Rajasthan projects, namely Ansal Royal Plaza, Orchid Plaza and Tulip Plaza. All other projects of the company in Agra, Ghaziabad, Mohali and elsewhere were expressly kept outside the ambit of the insolvency process, enabling construction activities and possession handovers in those projects to continue under the existing management.
The tribunal further directed that the Lucknow Development Authority be impleaded in the insolvency proceedings and permitted it to place its position on record by filing an affidavit. With these directions, the appeals were partly allowed, modifying the NCLT’s order by limiting the scope of insolvency while affirming the initiation of CIRP in respect of the identified projects.
