National Company Law Appellate Tribunal
Solapur Tollways Private Limited vs Union Bank Of India Limited on 20 November, 2025
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH: NEW DELHI
Company Appeal (AT) (Insolvency) No. 44 of 2025
[Arising out of the Order dated 20.12.2024, passed by the
'Adjudicating Authority' (National Company Law Tribunal,
Kolkata Bench) in CP([B)/33/KB/2024]
IN THE MATTER OF:
Vishal Arora
Indian Inhabitant Residing at:
M-104, BPTP Park Grandeura,
Sector 82, Faridabad - 121004
Email: [email protected] ...Appellant
Versus
1. Union Bank of India
Having its registered office at:
Union Bank Bhavan, 239,
Vidhan Bhavan Marg, Nariman Point,
Mumbai - 400021, Maharashtra ...Respondent No.1
2. Mr. Sanjay Kumar Mishra
(the IRP of Solapur Tollways Private Limited,
Reg. No. IBBI/IPA001/IPP01047/2017-
2018/11730),
Having his office at Dreams Complex,
4C-1605, LBS Marg, Bhandup (West),
Mumbai - 78 ...Respondent No.2
3. National Highway Authority of India
Ministry of Shipping, Road Transport and
Highways, Government of India,
G-5&6, Sector 10, Dwarka, New Delhi 110075 ...Respondent No.3
Present:
For Appellant : Mr. Abhijeet Sinha, Sr. Advocate with Ms. Smiti
Verma, Mr. Pranay Chitale and Mr. Samyak Jain,
Advocates
For Respondent : Mr. Krishnendu Datta, Sr. Advocate with Mr.
Madhav Kanoria, Ms. Alina Merin Mathew, Ms. Neha
Shivhare and Ms. Tara Ranade, Advocates for R-1.
Ms. Prachi Johri and Mr. Mrigangi Parul, Advocates
for R-3
Mr. Gopal Jain, Sr. Advocate with Mr. Deep Roy and
Mr. Dhaval Salva, Advocates for R-2
JUDGMENT
(Hybrid Mode) [Per: Arun Baroka, Member (Technical)] The Appellant is preferring the instant appeal challenging the admission order dated 20.12.2024 ("Impugned Order"), passed by the Hon'ble National Company Law Tribunal, Kolkata Bench ("NCLT") against Solapur Tollways Pvt. Ltd. ("STPL/ Corporate Debtor") in an insolvency petition filed under Section 7 of the IBC by Union Bank of India, Respondent No.1 herein. Submissions on behalf of the Appellant
2. The Appellant, a suspended director of the Corporate Debtor, is aggrieved by the Impugned Admission Order passed in respect of the Corporate Debtor. Succinctly put, the instant case is one of contrived default, wherein despite monies being available, default has been claimed and foisted upon the Corporate Debtor by the NHAI and the lenders. The Corporate Debtor is a special purpose vehicle ("SPV") with its only asset being the concession agreement dated 29.03.2012 ("Concession Agreement"). The Concession Agreement already stands terminated by NHAI, in respect of which disputes are currently pending between the Corporate Debtor and the National Highway Authority of India.
3. As a background of the concession agreement, it is claimed that the NHAI invited proposals by way of its RFP dated 20.06.2011 for short listing of bidders for construction, operation and maintenance of a highway section Company Appeal (AT)(Insolvency) No. 44 of 2025 2 of 99 from Solapur (KM 249+000)- Maharashtra/Karnataka Border (KM 348+800) section of NH-9 (Design length-100.06km) ("Project") in the state of Maharashtra. The consortium comprising Coastal Projects Limited and M/s SREI Infrastructure Finance Limited emerged as the winning bidders of the Project. Pursuant thereto, the said consortium incorporated the Corporate Debtor as an SPV. The Corporate Debtor is therefore an SPV which was incorporated for the specific and sole purpose of execution of the Project. After its incorporation, on 29.02.2012, the Corporate Debtor entered into a concession agreement ("Concession Agreement) with the NHAI for construction, operation and maintenance of the Project. Under the provisions of the Concession Agreement, upon completion of construction and issuance of a provisional completion certificate ("PCC") or completion certificate ("CC") by the NHAI, the Corporate Debtor would have the exclusive right to demand, collect and appropriate toll fee from vehicles and users during the term of the Concession Period (25 years in the instant case). The rights and obligations of the parties to the Concession Agreement were reciprocal so that that the timely completion of its obligations by the Corporate Debtor and its ability to collect toll were subject to the NHAI first fulfilling its preceding conditions stipulated under Article 4, 5, 6, 10 and 11 of the Concession Agreement. The cost of the construction of the project was estimated at Rs 882.62 Crores and was to be financed in a debt-to-equity ratio of 2:1.
Particulars Rs (In crores)
Senior Debt 588.42
Equity/Quasi Equity 294.21
Total 882.63
Company Appeal (AT)(Insolvency) No. 44 of 2025 3 of 99
4. Thus, for commissioning of the said works in terms of the Concession Agreement, the Corporate Debtor required financial assistance. To enable the Corporate Debtor to discharge its obligations with respect to the Project, the Financial Creditor extended a rupee facility to the Corporate Debtor by way of the Common Loan Agreement dated 03.08.2013 ("Common Loan Agreement"). There were subsequent amendments. to the Common Loan Agreement. Pursuant to the execution of the Fourth Amendment and Novation Agreement dated 15.02.2016, the list of lenders and their respective commitments stood thus:
Name of the Rupee lender Total amount of
commitment in the rupee
facility (in crores)
Union Bank of India 200
IIFCL 160
Oriental bank of Commerce 100
SREI 50
Vijaya Bank 50
Syndicate Bank 28.42
Total 588.12
5. The NHAI, the Corporate Debtor and the Financial Creditor also executed a substitution agreement dated 04.09.2013 ("Substitution Agreement") under which the Financial Creditor could inter alia substitute the Corporate Debtor with a Nominated Entity in terms of the Substitution Agreement. As stated above, the collection of toll/ commercial operation of the Project was subject to issuance of a Completion Certificate (CC) or Provisional Completion Certificate (PCC) in terms of Article 15.1 of the Concession Agreement. It must be noted, however, that for the purpose of issuance of the PCC, the Corporate Debtor had to complete at least 75% of the Project Highway. The availability of funds, was therefore, crucial to the commercial Company Appeal (AT)(Insolvency) No. 44 of 2025 4 of 99 operation of the Project, and the role of the lenders in duly discharging their obligation to disburse their respective commitment under the loan agreement was critical and imminent to the Corporate Debtor's ability to collect toll and sustainability of the project.
6. Appellant contends that with the termination of the Concession Agreement on 19.07.2024, the Corporate Debtor has ceased to be a going concern, and this is not a fit case for initiation of corporate insolvency resolution process either in the context of existence of default or in the context of resolution of debt.
7. The Corporate Debtor in the instant case is a special purpose vehicle ("SPV") which was incorporated specifically for the purposes of the project being construction, operation and maintenance of a highway section from Solapur (KM 249+000)- Maharashtra/Kamataka Border (KM 348+800) section of NH-9 (Design length- 100.06 km) ("Project") in the state of Maharashtra. The Concession Agreement was executed between the Corporate Debtor and the National Highway Authority of India. The project was partly funded by loans from a consortium of lenders under the Common Loan Agreement dated 03.08.2013. The Financial Creditor herein was the lead member of the consortium.
8. Appellant contends that the project, since the very beginning, suffered from breaches of both the NHAI and the lenders while the Corporate Debtor duly discharged its obligations under both the Concession Agreement and the Common Loan Agreement. While the Corporate Debtor completed a Company Appeal (AT)(Insolvency) No. 44 of 2025 5 of 99 substantial part of the project, making it eligible for issuance of a provisional completion certificate ("PCC") and to commence tolling, the NHAI suspended the Corporate Debtor's rights under the Concession Agreement with effect from 12.01.2023. Pursuant to such suspension, the control of the Escrow Account from which debts of the lenders were serviced, came in control of the NHAI.
9. In terms of the waterfall mechanism under Article 36.2.1 read with Article'31.3.l(f) of the Concession Agreement, it was the NHAI which was under an obligation to defray expenses in terms of the waterfall mechanism, which included expenses towards debt servicing of lenders. Despite this being an explicit obligation under the Concession Agreement, the NHAI did not service the debts of the Financial Creditor which eventually led to an insolvency petition being filed against the Corporate Debtor.
10. NCLT has admitted the insolvency petition filed by Respondent No.1 on the erroneous ground that "debt" and 'default'' in the instant case were established.
11. The Appellant challenges the impugned order on several grounds. It contends that NCLT has not considered the fact that at the time of filing of the insolvency petition, the project had already been suspended by the NHAI and pursuant to such suspension, it was the NHAI which was in control of the Escrow Account. The Concession Agreement had already been terminated by the Corporate Debtor due to the NHAI's defaults and the Corporate Debtor was no longer a going concern and this was not a fit case for initiation of CIRP. Company Appeal (AT)(Insolvency) No. 44 of 2025 6 of 99 The only thing left in the Corporate Debtor is a litigation (i) in relation to delays and defaults leading to increased EPC costs which claims are pending before an arbitral tribunal (ii) payment of termination costs in respect of which a notice invoking arbitration bas been issued and disputes are currently pending. In terms of the Concession Agreement (Article 36 read with Article 31 of the Concession Agreement), upon suspension, the NHAI assumed control of the escrow account and was under an obligation to defray expenses in terms of the waterfall mechanism, which included disbursing amounts towards debt servicing of lenders.
12. Prior to suspension, the Corporate Debtor was duly servicing the debts of the Respondent No.1 and the account was completely regularized. The debt became overdue only when NHAI came in control of the escrow account and failed to make disbursals in accordance with the waterfall mechanism despite the availability of sufficient funds in the escrow account. Even as per the Financial Creditor's case, the purported default happened only after the Concession Agreement had been suspended by the NHAI and it had assumed control over the Project and the Escrow Account. Even as per the Financial Creditor, it was the NHAI which had to service its debts post suspension of the Concession Agreement. During suspension, the Financial Creditor had written to NHAI requesting it to earmark sums for servicing lenders' debts and such request was in fact, acceded to by NHAI. Neither did the NHAIs service the debts not did it insist on substitution of the Corporate Debtor, ensuring that the exercise remained in limbo. Due to the NHAI's actions, despite the escrow account having adequate funds, the debt of the Financial Creditor was Company Appeal (AT)(Insolvency) No. 44 of 2025 7 of 99 not serviced. This was an instance of malicious initiation of insolvency inasmuch as the NHAI and the Financial Creditor "induced" a default on the part of the Corporate Debtor, which eventually resulted in the initiation of CIRP with respect to the Corporate Debtor. NCL T has not considered that the Concession Agreement already stood terminated pursuant to the Corporate Debtor's Termination Notice dated 19.07.2024. After such termination, the Corporate Debtor does not have any assets, and any resolution will essentially only result in the assignment of a claim. The insolvency petition was an abuse of the provisions of the IBC and the agenda of the Financial Creditors was not the debt resolution of the Corporate Debtor. Furthermore, the Corporate Debtor was entitled to assured payments in the form of Termination Payments in terms of Article 37.2 of the Concession Agreement which would take care of the Financial Creditor's claim. The Impugned Order did not consider the scheme of contracts amongst the Corporate Debtor, the NHAI and the lenders. Furthermore, the Concession Agreement, the Loan Agreement and the Substitution Agreement constitute one consolidated transaction, and the Loan Agreement cannot be considered in isolation. A perusal of the Concession Agreement, the Loan Agreement and the Substitution Agreement leads to the inevitable conclusion that one cannot simply look at the Loan Agreement in isolation to claim that there is a default. The following provisions assume importance in the present discussion:
A. Concession Agreement:
i. Withdrawals from escrow account- waterfall mechanism-
monthly proportionate provision of Debt Service due in an Accounting Year [Clause 31.3 (g)] Company Appeal (AT)(Insolvency) No. 44 of 2025 8 of 99 ii. Withdrawals upon termination- Amounts standing to the credit of the Escrow Account shall, upon termination, be appropriated in the following manner:
"...(b) 90% of Debt Due excluding Subordinate Debt"
[Clause 31.4] iii. During period of suspension, NHAI shall collect all fee and revenues and deposit the same in the Escrow Account. The NHAI shall make withdrawals from the Escrow Account for meeting the costs incurred by it for remedying and rectifying the cause of suspension and thereafter defraying expenses in terms of 31.3. [Clause 36.2.1] iv. Upon termination on account of Concessionaire Default during the Operation Period, the NHAI shall pay to the Concessionaire, by way of Termination Payment, an amount equal to 90% of the Debt Due less Insurance Cover. [Clause 37.3.1] v. Upon termination due to NHAI default, the NHAI shall pay to the Concessionaire, by way of Termination Payment, an amount equal to Debt Due and 150% of the Adjusted Equity. [Clause 37.3.2] vi. Debt Due defined B. Loan Agreement i. NHAI has granted to the borrower ("Corporate Debtor/ CD") a concession to undertake the project in accordance with the Concession Agreement/ CA. [Recital A] ii. At the request of the CD and to enable it to undertake the Project, the Financial Creditor had agreed to grant the rupee facility in question. [Recital B] iii. Proceeds of the Facilities to be solely applied towards part funding of the Project. [Clause 2.2] iv. Security for the Rupee Facility- First charge on all the CD's bank accounts including but not limited to the Escrow Account provided that the same shall be applied to the extent of waterfall of priority of payment as specified in clause 31 of the CA. [Clause 6.1] C. Substitution Agreement i. NHAI has entered into a Concession Agreement with the Corporate Debtor for the Project and senior lenders have agreed Company Appeal (AT)(Insolvency) No. 44 of 2025 9 of 99 to finance the project in accordance with the Financing Agreements. [Recitals A and B] ii. Lenders have requested the NHAI to enter into a substitution agreement for securing their interests through assignment, transfer and substitution of the concession to a Nominated Company. [Recital C] iii. Nominated Company defined as a company incorporated under the provisions of the Companies Act selected by the Lenders' Representative and proposed to the NHAI for assignment/ transfer of the concession. [Definition clause] iv. Right of substitution- The lenders' representative shall be entitled to substitute the Corporate Debtor by a Nominated Company. [Clause 3.1.1] v. Substitution envisaged in cases of both financial default and concessionaire default [Clauses 3.2 and 3.3 of the Substitution Agreement] vi. NHAI and the Corporate Debtor agree that after the date of notice of financial default or the date of representation to NHAI under 3.3.2, the Lenders' Representative may invite, negotiate and procure offers either by private negotiations or public auction or tenders for the take over and transfer of the project highway to the Nominated Company upon such Nominated Company's assumption of the liabilities and obligations of the Corporate Debtor. [Clause 3.4] vii. NHAI and the Corporate Debtor both agree that without prejudice to their rights and remedies, the Lender's Representative is entitled to receive from the corporate debtor, the Debt Due upon Termination of the Concession Agreement. For realization of the Debt Due, the Lenders' Representative shall be entitled to make its claim from the Escrow Account in terms of the Concession Agreement and Escrow Agreement. [Clause 5.3]
13. Appellant contends that from above reading it is clear that the Concession Agreement, the Loan Agreement and the Substitution Agreement, constitute one consolidated transaction. The Concession Agreement contains stipulations that secure the interest of the lenders by providing for Company Appeal (AT)(Insolvency) No. 44 of 2025 10 of 99 termination payments both where termination is on account of NHAI default or the Corporate Debtor's default. The object behind providing for Termination Payments is precisely for the purpose of securing the interest of the lenders de hors any dispute between the NHAI and the Corporate Debtor. Reliance is placed on Jetpur Somnath Tollways Limited v. National Highway Authority of India- 2017 SCC Online Del HC 9453- Paragraphs 64 to 66.
14. Additionally, both the Loan Agreement and the Substitution Agreement make explicit references to the Concession Agreement. The fact that a tripartite agreement in the form of the Substitution Agreement was executed with the NHAI, the lenders and the Corporate Debtor permitting the lenders' representative to substitute the Corporate Debtor with a Nominated Entity which is binding on the NHAI is itself indicative of the fact that the Loan Agreement is not a stand-alone agreement and cannot be seen in isolation to discern debt and default.
15. Appellant contends that the present case is not an appropriate case for admitting into insolvency inasmuch as there is no default in the instant case by the Corporate Debtor and it has been manufactured/ foisted upon the Corporate Debtor. In the present case default has been manufactured/ foisted upon the Corporate Debtor due to breaches of both the Financial Creditor and NHAI. NHAI suspended the rights of the Corporate Debtor under the Concession Agreement in terms of Clause 36.1 vide letter dated 31.12.2021. The suspension eventually took effect from 12.01.2023. As per Clause 36.2, during suspension NHAI acts on behalf of Corporate Debtor and Company Appeal (AT)(Insolvency) No. 44 of 2025 11 of 99 assumes all rights, obligations and liabilities of Corporate Debtor. The NHAI is also under an obligation to inter alia defray the expenses in terms of the waterfall mechanism set out in Article 31.3 of CA which includes "monthly proportionate provision of debt service payment." Even the conduct of the NHAI and the Financial Creditor in the period of suspension shows that the obligation to service debts was on the NHAI during the period of suspension.
16. Appellant contends that prior to the suspension of the Concession Agreement, the Corporate Debtor had duly serviced the loans and there was no default. However, upon assuming exclusive control of the escrow account after suspension, NHAI deliberately defaulted on repayment despite sufficient monies being available in the account. It is an admitted fact that the account of the Corporate Debtor with the Financial Creditor turned NPA in October, 2023 only after the suspension took effect, as is borne out from both the impugned order as well as the insolvency petition filed by the Respondent No.1.
17. The Financial Creditor's conduct demonstrates that this is an instance of malicious initiation of IBC inasmuch as it becomes clear from the Financial Creditor's conduct that the proceedings have been filed for purpose other than the resolution of insolvency. Apart from the fact that it did not service the Financial Creditor's debts contrary to the terms of the Concession Agreement, the NHAI also illegally failed to disburse Termination Payments in terms of the Concession Agreement. While contemporaneous correspondence establishes that the Financial Creditor's own understanding was that the Company Appeal (AT)(Insolvency) No. 44 of 2025 12 of 99 NHAI was liable to service debts during the period of suspension, the Financial Creditor proceeded to file the insolvency petition against the Corporate Debtor soon after in February 2024. It is also important to note that the Concession Agreement has been terminated by the Corporate Debtor vide its termination notice dated 19.07.2024. The Concession Agreement contemplates the payment of amounts defined as Termination Payments irrespective of whether the termination of the CA is for Corporate Debtor's default or the NHAI's default.
18. The Concession Agreement is a terminable contract and in terms of Section 14 of the Specific Relief Act, 1963, cannot be restored. Assuming without admitting that the Termination Notice is inoperative and inapplicable, Clause 36.5.2 provides for automatic termination of the Concession Agreement once the maximum period of suspension as contemplated in the Concession Agreement expires. Therefore, it is not open for any party to now contend that the Concession Agreement continues to subsist or that Termination Payments are not payable on account of termination. In conduct that is in the teeth of explicit statutory provisions and clauses of the Concession Agreement, the Resolution Professional, the Committee of Creditors (of which the Financial Creditor is a part) and the NHAI have continued to treat the Concession Agreement as subsisting.
19. The fact that the Concession Agreement stands terminated and the provision for Termination Payments have been completely disregarded by the lenders as well as the NCLT in the proceedings before it. While in its pleadings, Company Appeal (AT)(Insolvency) No. 44 of 2025 13 of 99 the Financial Creditor has not even made any reference to it, in the course of its oral submissions before this Appellate Tribunal, it was sought to be argued by both the Financial Creditor and the NHAI that the Termination Payments did not ensure to the benefit of the lenders and were subject to the outcome of the arbitration between the Corporate Debtor and the NHAI. Both such contentions are contrary to settled law and establish that the filing of insolvency petition against the CD despite the safeguards in the CA has been done for reasons other than insolvency resolution.
20. Appellant also places heavy reliance on Jetpur Somnath Tollways Limited vs. National Highway Authority of India (SB) 2017 SCC Online Del HC 9453 which has been dealt by us hereinafter in our appraisal.
21. In its application of the test, however, and in ascertaining whether there is a default, the NCLT restricts its analysis and findings to records of an information utility and balance sheets and auditor's reports of the corporate debtor. The Appellant submits that the NCLT has erred in completely disregarding the CD's contentions and basing its finding on default solely on information utility records and balance sheets of the company when neither constitutes an unequivocal record of default.
22. The reliance placed by the NCLT on just records of information utilities and balance sheets as unequivocal admissions of default are contrary to the law laid down in the judgments cited below:
Company Appeal (AT)(Insolvency) No. 44 of 2025 14 of 99 a. Swiss Ribbons Private Limited v. Union of India- 2019 4 SCC 17- Paragraph 87- Information utility records are only prima facie evidence of default which is rebuttable by the CD.
b. IL&FS Financial Services v. Adhunik Meghalaya Steel Private Limited 2025 SCC Online SC 1567- Paragraph 33-Entries in balance sheets have to be relied upon on a case to case basis - It would depend on the facts of each case whether an entry in the balance sheet qua any particular creditor is unequivocal or has been entered into with caveats.
And the Appellant claims that above also violate section 7(5) which necessarily envisages an analysis and satisfaction of the NCLT regarding the occurrence of a default.
23. The NHAI's case on the termination of the Concession Agreement not having been effected due to lack of acceptance by the NHAI cannot be countenanced. In its reply, the NHAI has contended that the Corporate Debtor's termination letter dated 19.07.2024 ("Termination Letter") terminating the Concession Agreement has not been accepted by the NHAI and therefore the Concession Agreement cannot be treated as terminated. On the same ground, NHAI contends that the Corporate Debtor is not entitled to any Termination Payment. The Appellant submits that this contention is contrary to a plain reading of the Concession Agreement and also contrary to law inasmuch as the Concession Agreement is a terminable contract. The Concession Agreement does not contemplate acceptance by the NHAI as a Company Appeal (AT)(Insolvency) No. 44 of 2025 15 of 99 pre-condition for termination taking effect and such an interpretation rewrites the contract between the Corporate Debtor and the NHAI. Before the NCLT, the Corporate Debtor had in fact argued that it was being pushed into insolvency by the complicity and defaults of the NHAI and the lenders when the Concession Agreement contained adequate safeguards to secure the amounts due to lenders in the form of Termination Payment. It is clear that the NHAI has taken this stance about non-acceptance of termination simply to wriggle out of its obligation to disburse Termination Payment as stipulated in clause 37.2 of the Concession Agreement and completely disregards that Termination Payments are assured payments which ensure to the benefit of the Corporate Debtor and the lenders. In fact, not only is the lenders' interest secured by way of Termination Payments, in the event of termination due to NHAI default (which was the Corporate Debtor's case), the Termination Payment is also inclusive of 'adjusted equity' to account for the money contributed by the shareholders. The NHAI seeks to undo all of it and deprive both the lenders as well as the Corporate Debtor of these assured payments to escape its liability to make such payments by claiming, in a manner that is completely contrary to the contract on the self-serving and untenable ground that termination has not been accepted by the NHAI. Such an argument that termination of the Concession Agreement can only take effect upon NHAI's acceptance also overlooks clause 36.5.2 of the Concession Agreement which provides that in the event suspension is not revoked within 180 (one hundred and eighty) days from the date of suspension or within the extended period, if any, set forth in clause 36.1, the Concession Agreement Company Appeal (AT)(Insolvency) No. 44 of 2025 16 of 99 shall, upon expiry of the period be deemed to have been terminated by mutual agreement of the Parties. The NHAI has not controverted that the suspension period was illegally extended by NHAI when in fact in terms of clause 36.5.2, the Concession Agreement was to terminate automatically and the same would entitle the Corporate Debtor to Termination Payments. It must be mentioned that in terms of clause 37.3 of the Concession Agreement, the value of termination payment in the event of NHAI default is INR 1355 Crores and in the event of Corporate Debtor default is INR 823 crores. Because of the untenable stance of the NHAI that the termination of the Concession Agreement has not been accepted, the Resolution Professional has not taken any steps to recover or secure the termination payments. The Appellant in fact addressed an email dated 03.04.2025 to the Committee of Creditors of the Corporate Debtor sharing a report prepared by an independent consultant showing a detailed analysis of the quantum of termination payments in different scenarios. Thus, the stand that the Concession Agreement did not stand terminated since it was not accepted by the NHAI has no basis in the Concession Agreement and is being imposed by the NHAI simply in a bid to deprive the Corporate Debtor of Termination Payment which are due to it, and to keep the insolvency proceedings on against the Corporate Debtor.
24. The NHAI has wrongly contended that the Corporate Debtor was not entitled to deferment of premium or extension of time. In its Reply, the NHAI contends that deferment of premium and extension of time could not be demanded as a matter of right and it had made it clear to the lenders that disbursal of money could not be made contingent on any extension of time by Company Appeal (AT)(Insolvency) No. 44 of 2025 17 of 99 the NHAI. The Appellant submits that the NHAI's stance completely disregards that NHAI itself is solely responsible for the delay in the project. In the appeal, the Appellant has shown that there was a delay in declaration of Admitted Delay (AD) by 28 months due to NHAI's inability to hand over ROW. The Appellant agreed to such delayed declaration only because its name was included in the notification of 4th March, 2014 as a stressed project which was entitled to deferment of premium. In the absence of such assurance that the premium payment would stand deferred, the Corporate Debtor would not have accepted such delay in declaration of the Appointed Date. Having led the Corporate Debtor to accept the delayed declaration of Appointed Date by including its name as an eligible project for deferment of premium, the NHAI is precluded from contending to the contrary at a belated stage. As far as the contention that extension of time could not be demanded as a matter of right is concerned, a perusal of the Corporate Debtor's claim against the NHAI will show, the NHAI was responsible for the following admitted delays:
i. Admitted delay of 28 months in declaration of Appointed Date due to NHAI's failure to hand over 80% of the site;
ii. Admitted delay in handing over of land of 872 days; and iii. Admitted delay in grant of provisional completion certificate of over 13 years during which the Corporate Debtor could not start tolling.
25. Due to NHAI's defaults, the concession period which was 25 years as per Concession Agreement was effectively reduced to 20 years completely. It was on the basis of a 25- year concession that the Corporate Debtor had designed its revenue model, availed financial facilities and structured its debts Company Appeal (AT)(Insolvency) No. 44 of 2025 18 of 99 to execute the Concession Agreement. The fact that the Corporate Debtor was entitled to both extension of time as well as deferment of premium can be ascertained from (i) Independent Engineer's letter dated 12.06.2021 recommending extension of time for the Corporate Debtor; and (ii) NHAI's own notification dated 04th March 2014 including the Corporate Debtor's name as a stressed project entitled to deferment of premium. It was due to NHAI's defaults which plagued the project that the Corporate Debtor was constrained to arrange for additional funds.
26. The NHAI has wrongly contended that the Escrow Account did not have adequate funds and that it could not have serviced the debts of the Corporate Debtor. The NHAI has contended that in terms of clause 36.2.1 of the Concession Agreement, it had the right to make withdrawals from the Escrow Account "for meeting the costs incurred by it for remedying and rectifying the cause of suspension" and only thereafter for defraying the expenses in terms of Clause 31.3 of the Concession Agreement. NHAI submits that while work worth more than INR 100 Crores remained pending, it could not be said that there was not enough money available for servicing debts in the Escrow Account. The aforesaid reasoning is fallacious on several counts. At the outset, the Appellant submits that the aforesaid is an artificial problem which is the NHAI's own creation. Appellant claims that the lenders have informed the NHAI that INR 171 crores remained available for the project (INR 101 crores of additional funds having been arranged by the promoters and INR 69 crores being the remaining, undisbursed funds by the lenders). Despite this, the NHAI refused to grant extension of time and deferment of premium and Company Appeal (AT)(Insolvency) No. 44 of 2025 19 of 99 instead created circumstances in which the project now remains incomplete, and the Corporate Debtor finds itself undergoing an artificially imposed CIRP. It was the NHAI which created circumstances which made the timely completion of the project difficult, used that as a pretext to illegally suspend the Corporate Debtor's rights under the Concession Agreement and stopped servicing the lenders' debts post suspension. Even after suspending the Corporate Debtor's rights under the Concession Agreement and illegally extending the suspension period to 541 days as against the maximum period of 270 days stipulated in the Concession Agreement, the NHAI itself could not complete the pending works and managed to complete only 6-7% of the total work. As per the Concession Agreement, the construction period for the entire project is 30 months and the total progress achieved by the NHAI in 18 months of illegal suspension was 6-7%. In fact, even now the project road remains incomplete. In the circumstances, the NHAI cannot be allowed to assert that it could not service the debts of the Corporate Debtor as there was a paucity of funds in the Escrow Account.
27. The contention that there were insufficient funds in the escrow account is a clear afterthought inasmuch as the NHAI acceded to the request of the Financial Creditor dated 22.09.2023 to approve the payment of senior lenders. In its reply dated 31.10.2023, the NHAI did not make any reference to not being under the obligation to make payments to the lenders on account of any paucity of funds.
Company Appeal (AT)(Insolvency) No. 44 of 2025 20 of 99
28. The NHAI has also referred to the purported failure of the Corporate Debtor in paying the premium/ additional concession fee which as per the NHAI had priority over debt service payments. The aforesaid contention is completely misconceived and contrary to the clauses of the Concession Agreement and the Escrow Agreement. It is submitted that in terms of clause 4.1.1 of the Escrow Agreement, the Premium due and payable to the NHAI is below the monthly proportionate provision of Debt Service due in an Accounting Year.
29. It was upon considering the nature of the project and that the dispute between the NHAI and the Corporate Debtor was closely intertwined with the dispute at hand that this Appellate Tribunal was pleased to order on 13.01.2025 that the NHAI be impleaded as a Respondent. The Appellant has challenged the initiation of CIRP on the ground that there was no "default" in terms of Section 3(12) of the IBC, and the same is attributable to external factors including acts/omissions of NHAI. While NHAI is not a financial creditor, its conduct is central to determining the existence of default. NHAI's actions, including illegally suspending the Corporate Debtor's rights under the Concession Agreement and illegally extending the period of suspension far beyond the maximum stipulated time under the Concession Agreement had the effect of wrongly imposing the present insolvency proceedings upon the Corporate Debtor.
30. The allegation regarding the delay in financial close in 180 days being attributable to the Corporate Debtor are absolutely false to the knowledge of Company Appeal (AT)(Insolvency) No. 44 of 2025 21 of 99 the NHAI. As set out in the Appeal, it was in fact the NHAI that failed to provide unencumbered land and RoW, a precondition for Appointed Date declaration. This delay in handing over RoW and requisite clearances rendered Financial Close unachievable within the stipulated timeline. As far as the delay in issuance of the PCC is concerned, while the Corporate Debtor was eligible for issuance of a PCC in December 2018 while it was due to the NHAI's delay that the PCC was issued only in January, 2020. Lastly, the fact that the NHAI is wrongly attributing delay to the Corporate Debtor can also be ascertained from the fact that even after taking over control of the project pursuant to the illegal suspension of the Concession Agreement as far back as 13.01.2023, the NHAI has failed to complete the project. It is clear that the delay in the instant project is not attributable to the Corporate Debtor.
31. The allegation that the Corporate Debtor wilfully failed to pay the premium of INR 27.99 crores and the enhanced amounts thereafter under Clause 26.2.9 of the Concession Agreement is misleading and factually incorrect and disregards the fact that the NHAI had included the name of the Corporate Debtor as a stressed asset which would be entitled to deferment of premium payment. Despite the issuance of the Deferment Notification by NHAI dated 04.03.2014, which acknowledged the need for premium relief due to COVID-related and other revenue impacts, NHAI arbitrarily denied the benefit of deferment to the Corporate Debtor. The Appellant and the Financial Creditors made specific representations seeking application of the deferment policy, but NHAI failed to respond or act, in breach of its own circular and has Company Appeal (AT)(Insolvency) No. 44 of 2025 22 of 99 taken the stand that deferment of premium could not be demanded as a matter of right.
32. The allegation that the Lead Banker of the Corporate Debtor wrongfully prioritized debt servicing over premium payments in violation of Clause 31.3.1 of the Concession Agreement is denied as incorrect and misleading. It is denied that the payment of premium is ahead of debt servicing in the waterfall mechanism for disbursals from the Escrow Account. In fact, a perusal of the Escrow Agreement executed amongst the Corporate Debtor, the NHAI and the Escrow Agent will show that premium, which is additional concession fee, falls below the clause for repayment of debt in the waterfall.
33. The assertion that the Corporate Debtor has failed to complete the remaining 13 km of the project and has thereby caused public inconvenience is factually misleading and omits NHAI's own contributory default. The delay in completion of the balance stretch was not attributable to the Corporate Debtor, but primarily due to factors beyond its control, including delays, all of which fall within the domain and responsibility of NHAI or relevant government authorities. The NHAI has also omitted to mention that despite illegally extending the suspension period and taking over control of the project, the NHAI has failed to complete the project itself and in a span of 18 months (from the date of suspension to the date of termination), had managed to achieve only 5-6% progress. This is when the Concession Agreement envisages the entire construction to take place within a period of 30 months. In fact, the Project still remains incomplete.
Company Appeal (AT)(Insolvency) No. 44 of 2025 23 of 99
34. The selectively summarised meeting proceedings and funding issues between the Corporate Debtor and lenders, are partial and omit the crucial context that explains the financial distress and inability to proceed with balance works. The NHAI has omitted that the lenders had expressed confidence in the Corporate Debtor's ability to complete the project and had even informed the NHAI regarding the availability of additional funds arranged by the promoters and the lenders which could be utilised to complete the project if the NHAI agreed to an extension of time and deferment of premium. Despite such request from the Financial Creditor, the NHAI did not agree to EOT and deferment of premium and ensured that the project fell into jeopardy.
35. While it is NHAI's case that it was constrained to suspend the right to collect toll under the Concession Agreement with the sole intention to complete the project, it has omitted to mention that its own progress since taking over the project has been abysmal despite extending the suspension period far beyond the maximum stipulated time of 270 days. As the Corporate Debtor recorded in its termination notice dated 19.07.2024, the NHAI managed to achieve only 5-6% progress prior to termination of the Concession Agreement. In fact, the project has now been in the control of the NHAI for more than two years despite which it remains incomplete.
36. The Corporate Debtor's letter dated 19.05.2022 reflected an intent to mobilize funds, contingent on project stability and toll revenue continuity. The additional funds of approximately INR 100 crores arranged by the Corporate Company Appeal (AT)(Insolvency) No. 44 of 2025 24 of 99 Debtor after the sale of the two SPVs were earmarked for the project but the NHAI did not agree to a deferment of premium and extension of time.
37. The standstill in project work was a result of the NHAI's delay and breaches. The lenders' position that time extension was a precondition for fund infusion was justified given the uncertainty created by NHAI itself. The NHAI cannot be allowed to take the stand that extension of time and deferment of premium could be demanded as a matter of right since the delay was attributable to the NHAI and also since its notification on premium deferment explicitly included the name of the Corporate Debtor as a stressed project eligible for deferment of premium.
38. The NHAI's interpretation of the letter dated 17.09.2022 is selective and self-serving. In the said letter dated 17.09.2022, the lender had inter alia expressed that the total funds available for completion of the project were INR 171 crores (INR 102 Crores arranged by the Corporate Debtor and INR 69 crores being the undisbursed portion of the lenders' contribution). The lender went on to state that in the event the NHAI granted deferment of premium and EOT as sought by the Corporate Debtor and as also recommended by the Independent Engineer, the Corporate Debtor would be able to complete the project and the lenders would be in a position to disburse the balance debt for completion of the project. In its response to the said letter, the NHAI addressed a letter dated 14.11.2022 in which it asked the lenders to utilize the available amount of INR 171 crores without insisting on EOT and deferment of premium despite the lenders categorically informing the NHAI Company Appeal (AT)(Insolvency) No. 44 of 2025 25 of 99 that the lenders would not disburse funds in the absence of EOT and deferment of premium.
39. The letter dated 02.12.2022 addressed by the lenders to the NHAI in fact strengthens the Appellant's case that the Corporate Debtor was pushed into insolvency despite having sunk in significant additional funds and remaining committed to the completion of the project. The purported default in the instant case is a consequence of the NHAI and the lenders not acting in the interest of the project.
40. It is reiterated that NHAI cannot simply reject the Termination Notice. The Concession Agreement was a terminable contract and there was nothing in the Concession Agreement which contemplated termination only upon acceptance of such termination by the NHAI, and such an interpretation is tantamount to rewriting the Concession Agreement. This is without prejudice to the Appellant's contentions that the Corporate Debtor was not responsible for the delay in completion of the Project.
41. The fact that the NHAI was under an obligation to service the debts of the Corporate Debtor once the Corporate Debtor's rights were suspended is borne out from a reading of the contract. Firstly, the suspension was illegally effected and then the NHAI did not even disburse the amounts from the Escrow Account in terms of the waterfall mechanism. It cannot therefore contend that the default in this case was not induced by its own actions. It is a matter of record that the account turned NPA in October, 2023 when the account was in the control of the NHAI. The Appellant is not seeking Company Appeal (AT)(Insolvency) No. 44 of 2025 26 of 99 adjudication on contractual breaches or interpretation of the Concession Agreement in this appeal. The limited and relevant issue before this Hon'ble Appellate Tribunal is whether a default under Section 3(12) of the IBC truly occurred, a question well within this Hon'ble Tribunal's jurisdiction.
42. The Appellant respectfully contends the core issue in this appeal is whether a genuine "default" exists under Section 3(12) of the IBC, which must be assessed in light of material circumstances particularly, NHAI's conduct that directly led to the alleged default. At the outset, it is denied that prior to suspension, the Corporate Debtor was collecting toll but not servicing its debts. The Corporate Debtor has produced records which show that it was duly servicing its debts prior to suspension and it was only subsequent thereto that the NHAI stopped disbursing money towards loan repayment and the account became NPA. While the issue of the defaults committed by the NHAI are pending before the Ld. Arbitral Tribunal, they are also intrinsically linked to the artificial and mala fide imposition of default and consequent insolvency upon the Corporate Debtor.
43. After having failed to discharge its obligations under the Concession Agreement and causing inordinate delays in project completion, having illegally suspended the rights of the Corporate Debtor, the NHAI has taken the specious and self-serving argument that repayment liability is not on the NHAI, and it was for the Corporate Debtor to procure further funding. It is incorrect to suggest that funding issues were purely between the Corporate Debtor and its lenders. The record shows that the lenders' disbursement Company Appeal (AT)(Insolvency) No. 44 of 2025 27 of 99 was contingent on NHAI's cooperation, particularly on time extension without penalties and deferment of premium. The NHAI cannot seek to distance itself from the responsibility of having induced the default of the Corporate Debtor by claiming that it was acting strictly within the four corners of the Concession Agreement and omitting to mention that the Corporate Debtor was in fact entitled to both extension of time (as even recommended by the Independent Engineer) and deferment of premium by virtue of inclusion of its name in the list of stressed assets entitled to premium reduction.
44. The NHAI has sought to distance itself from its obligation to defray expenses in terms of the waterfall mechanism in clause 31.3 of the Concession Agreement that after accounting for remedying and rectifying the cause of suspension, there were no funds remaining for servicing the debts of the Corporate Debtor. The falsity of this submission can be ascertained from the fact that while the NHAI has used the pretext of pending work to claim insufficient funds for servicing the CD's debts, but even after being in control of the project for 18 months (from the date of suspension to the termination of the Concession Agreement), the NHAI could only attain 5-6% progress and the project still remains incomplete. It is also fallacious to claim that even after disbursal of INR 8 crores which were earmarked for debt servicing, the outstanding would far exceed the threshold amount of INR 1 crore for invocation of arbitration. It was due to the NHAI's failure to disburse funds towards loan repayment that the entire loan amount was recalled by the Financial Creditor.
Company Appeal (AT)(Insolvency) No. 44 of 2025 28 of 99
45. The Termination Notice was issued lawfully under Article 37 due to NHAI's prolonged breaches and refusal to restore toll rights or provide relief. The mere filing or pendency of a Section 7 petition does not bar a concessionaire from exercising contractual remedies where no moratorium was yet in force. Further, the invocation of substitution by lenders did not suspend the Corporate Debtor's right to terminate under Article 37, especially where NHAI failed to act on such substitution in a time-bound or commercially effective manner. The Appellant also reiterates that the Concession Agreement was a terminable contract and there was nothing therein which made termination subject to the NHAI's approval or consent and such an interpretation is alien to the express terms of the Concession Agreement.
46. The Termination Notice was lawfully issued by the Corporate Debtor under Article 37 of the Concession Agreement, after prolonged inaction by NHAI and failure to implement mandated reliefs like the Deferment Notification and illegal extension of the suspension far beyond the maximum stipulated time of 270 days. NHAI's unilateral rejection of the termination (via letter dated 05.08.2024) does not nullify its effect as there is nothing in the Concession Agreement which makes termination effective only upon NHAI's approval or consent. The fact that the Section 7 petition was filed earlier in February 2024 does not bar the Corporate Debtor from exercising contractual rights in the absence of a moratorium or NCLT restraint at the time of termination.
Company Appeal (AT)(Insolvency) No. 44 of 2025 29 of 99
47. The Appellant reiterates that the alleged default was not wilful, but induced by external factors attributable to the NHAI and the lenders. The IBC does not envisage pushing solvent companies into default and then invoking the IBC machinery against them. The object and purpose of IBC will be defeated if it is adopted in instances such as these when the default is a creation of complicity between the NHAI and the lenders.
48. Thus, the appeal is maintainable as it challenges the threshold test under Section 7 of the IBC--specifically, whether any financial default existed in the legally recognized sense. Although NHAI was not a party to the loan agreements, it played a central role in frustrating the project's revenue structure by failing to disburse amounts earmarked for debt servicing during the suspension period, when it had control over the Escrow Account. The contention that NHAI was merely a third party to the bank-Corporate Debtor contracts is untenable in light of the escrow mechanism and the concession framework, both of which conferred upon NHAI oversight and rights directly affecting project cash flows.
Submissions on behalf of the Respondent No.1 - Union Bank of India
49. The Admission Order deserves to be upheld as the present case is a clear case of existence of "debt" and "default" on part of the Corporate Debtor thus warranting admission of the Corporate Debtor under CIRP. NCLT has correctly observed in Para 45 of the Admission Order that the moment a debt becomes due and payable, the Adjudicating Authority is satisfied that the default has occurred, a petition under Section 7 of the Code must be admitted and that the Adjudicating Authority is not empowered to probe into the Company Appeal (AT)(Insolvency) No. 44 of 2025 30 of 99 dispute between the parties. Further, the NCLT has rightfully come to the conclusion that the twin requirements of 'debt' and 'default' on part of the Corporate Debtor has been satisfied on the basis of several documents including the record of default of the information utility, NeSL, the statement of accounts of the Corporate Debtor and the balance sheets of the Corporate Debtor and therefore, the present case is a fit case for admission of the Corporate Debtor under CIRP. Accordingly, the admission of the Section 7 Petition was warranted in light of the Hon'ble Supreme Court's judgment in Innoventive Industries Ltd. v. ICICI Bank and Anr., (2018) 1 SCC 407) (Paras 27 and 30) and ES Krishnamurthy v. M/s Bharath Hi Tech Builders (2022) 3 SCC 161 (Paras 31, 34, 36 & 39) and Suresh Kumar Reddy vs. Canara Bank & Ors., 2023 8 SCC 387 (Paras 10, 11 and 14).
50. Appellant's contention that the present case is a case of 'contrived default' (i) which has been manufactured by the Respondent No. 3, National Highway Authority of India ("NHAI") which had imposed a malafide suspension upon the Corporate Debtor, taking over the project including the right to collect toll and other rights of the Corporate Debtor and; (ii) that the project was marred by breaches by the lenders, is immaterial. It is an admitted position that the Corporate Debtor has been defaulting on servicing of its debt to the lenders since 2019. In fact, the lenders had restructured the Loan Agreement dated 03.08.2023, as amended ("Loan Agreement") and extended the date of repayment of first instalment from time to time, due to the inability of the Corporate Debtor to service the debt of the lenders on a timely basis. Company Appeal (AT)(Insolvency) No. 44 of 2025 31 of 99
51. Adjudicating Authority is not entitled to examine the reason for commission of financial default under Section 7 of the Code, when the requirement of 'debt' and 'default' have clearly been established. Reliance is placed on the Hon'ble Supreme Court's judgment dated 27.02.2023 in Abhijeet Integrated Steel Limited vs. IDBI Bank Limited, Civil Appeal No. 1257 of 2023 wherein the Hon'ble Supreme Court upheld this Hon'ble Tribunal's order in IDBI Bank Limited vs. Abhijeet Integrated Steel Limited, 2023 SCC OnLine NCLAT 1182, whereby this Hon'ble Tribunal had categorically observed that "....
when a Corporate Debtor is unable to pay its debt, which becomes payable, it is a warning signal for Corporate Debtor and when an Application is filed by a Financial Creditor to initiate CIRP under Section 7 and there are ample material that Corporate Debtor is unable to pay its debt and has committed default, the Adjudicating Authority is not required to go into the reasons of default and ignore the real status of the Corporate Debtor and close its eyes to the fact that the Corporate' (Paras 16-24)."
52. R1-UBI contends that the NCLT has rightly admitted the Corporate Debtor under CIRP after examining that the debt became due and payable by the Corporate Debtor and the Corporate Debtor has committed a default in terms of the Loan Agreement. It contends that 'the moment a debt becomes due and the adjudicating authority is satisfied that default has occurred, a Section 7 application must be admitted' (Innoventive Industries Ltd. v. ICICI Bank and Anr, (2018) 1 SCC 407 at Paras 27, 38 and 30, ES Company Appeal (AT)(Insolvency) No. 44 of 2025 32 of 99 Krishnamurthy v. M/s Bharath Hi Tech Builders (2022) 3 SCC 161 at Paras 31, 34, 36 & 39).
53. Further, the Hon'ble Supreme Court in Suresh Kumar Reddy vs. Canara Bank & Ors., Civil Appeal No. 7121 of 2022 (11.5.2023) held that:
"Thus, once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7...." (Paras 10, 11 and 14).
54. R1-UBI further contends that the debt is due and payable by the Corporate Debtor. As per the Loan Agreement read with the Fourth Novation and Amendment Agreement dated 15.02.2016, UBI had agreed to disburse an amount of INR 200 Cr. for part financing of the Project. In accordance with Clause 5.7 of the Loan Agreement the Facility availed by the Corporate Debtor could be disbursed in one or more instalments subject to the Corporate Debtor complying with the disbursement procedure stipulated in the Loan Agreement. Pursuant to the aforesaid clause, UBI made a disbursement of INR 174,00,28,128 in favour of the CD in 43 instalments as on 03.06.2015.
55. R1-UBI further brings to our notice the Commission of 'default' by the Corporate Debtor under the Loan Agreement.
"Clause 2.6 (Repayment) of the Loan Agreement states as follows:
(i) The Borrower shall repay the Loans to the Rupee Lender in 47 (forty seven) unequal quarterly instalments as specified in the Amortization Schedule. The first repayment instalment shall be due on June 30, 2016. The last repayment instalment shall be paid on December 31, 2027.
Further, Clause 3.1.1. of Article III (Interest, Liquidated Damages, Commitment Charges; Etc) of the Loan Agreement provides as follows:
"A. Interest
(i) The Borrower shall pay to the Rupee Lender interest for the Interest Period at the Applicable Interest Rate on the Loans.
Company Appeal (AT)(Insolvency) No. 44 of 2025 33 of 99 Such interest shall be paid monthly in arrears on the Interest Payment Dates."
56. As per the Repayment Clause in the Loan Agreement, the principal amount so disbursed was to be repaid in accordance with the Amortisation Schedule and the date of repayment of the first instalment was extended till 30.09.2020. Additionally, in accordance with interest payment clause in the Loan Agreement (Clause 3.1.1. of Article III (Interest, Liquidated Damages, Commitment Charges etc) read with definition of 'Interest Payment Date' and 'Interest Period', the Corporate Debtor was under an obligation to pay interest to all the lenders at applicable interest rates of their respective loans monthly from the date of the initial disbursement. However, it is an admitted fact that the Corporate Debtor was in a continuous default in terms of the Loan Agreement and had failed to service the interest falling due since 31.07.2019 and accordingly UBI had issued the letters dated 19.08.2019 and 25.09.2019 to the Corporate Debtor requesting the Corporate Debtor to regularise the accounts. Since the Corporate Debtor was consistently failing to regularise its account, the lenders restructured the Loan Agreement several times and the date of repayment of first instalment of the principal amount was extended till 30.09.2020.
57. UBI recalled the Facility vide its letter dated 04.02.2023 in exercise of its rights in terms of Clause 9.2 'Consequences of Events of Default' of the Loan Agreement as per which 'Rupee Lender shall have the right to terminate its commitment and accelerate the obligations of the Borrower and in exercise of such rights, the Rupee Lender may, without prejudice to any rights that it Company Appeal (AT)(Insolvency) No. 44 of 2025 34 of 99 may have, take one or more of the following actions including but not limited to:
(i) declare the Secured Obligations to be forthwith due and payable, whereupon such amounts shall become forthwith due and payable without presentment, demand, protest or any other notice of any kind..'
58. The Corporate Debtor defaulted in repayment of interest for a consecutive period of 3 months and the loan account of the Corporate Debtor was classified as NPA as on 29.10.2023 per the RBI guidelines which triggered an 'Event of Default' under the Clause 9.1 (a) (i) of the Loan Agreement which states that 'Failure by the Borrower in the repayment/payment of the Loans and/ or interest on the Loans and/ or any amounts payable under the Finance Documents on the respective Due Date default in repayment of interest or the principal amount for a continuous period of thirty (30) days would amount to an event of default'.
59. Corporate Debtor has also sent Debit Balance Confirmation Letters dated 28.03.2018, 06.04.2022, and 31.03.2023 and Letter of confirmation dated 29.05.2019 to UBI, confirming the balance with respect to the Loan Agreement.
60. The existence of default having committed by the Corporate Debtor is also evident from the following documents:
"(i) The default has been acknowledged and identified in the Report of the Information Utility, National E-Governance Services Limited which has been authenticated by the corporate Debtor.
(ii) The Balance Sheet and Auditor's Report for Financial Year 2022-2023 of the Corporate Debtor evidenced existence of financial Company Appeal (AT)(Insolvency) No. 44 of 2025 35 of 99 debt and default. The Auditor's Report further states 'the Company has defaulted in repayment of principal and interest to Financial institutions'.
(iii) Further, as per the financial statements, the finance cost of the CD for the FY 2022- 23 is INR 11,742,00,000 while the CD has incurred a loss of INR 14,720,00,000 thus making it evident that the Corporate Debtor is under grave financial distress.
(iv) Statement of the accounts of the Corporate Debtor evidencing late payment and non- payment of principal and interest amounts."
61. Further, the contention of the Appellant that the NCLT's reliance on the record of default as per the NeSL to establish default on part of the Corporate Debtor is insufficient to justify the admission of the Corporate Debtor under CIRP, is baseless. In this regard, it is submitted that it is well settled that 'the in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred' (Para 30 of Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407).
62. It is also well settled that 'when the record of Information Utility shows debt in default, the Adjudicating Authority or Appellate Authority are not required to further examine the record maintained by the Information Utility, especially when the record is deemed authenticated and no dispute or refutation has been done by the corporate debtor earlier' (Para 16 of Vipul Himatlal Shah v. Teco Industries, 2022 SCC OnLine NCLAT 209).
"....
Company Appeal (AT)(Insolvency) No. 44 of 2025 36 of 99
16. In the light of the detailed discussion as above, it is clear that in case the record of Information Utility shows that there is a debt which is in default, the Adjudicating Authority or the Appellate Authority are not required to further examine the record maintained by the Information Utility, moreso when the record of the Information Utility is deemed authenticated and no dispute or refutation of said record has been done by the corporate debtor earlier. We also note that in the judgment of Rushabh Civil Contractors Pvt. Ltd. vs. Centrio Lifespaces Ltd. (supra), which has been cited by the Learned Counsel for Appellant, the record that formed the basis for financial debt and default was found to be forged and fabricated, which is not the case in the present appeal. Therefore, this judgment does not come to the rescue of the Appellant."
63. Therefore, it is contended that the NCLT has correctly observed that the moment a debt becomes due and payable, the Adjudicating Authority is satisfied that the default has occurred, a petition under Section 7 of the Code must be admitted and that the Adjudicating Authority is not empowered to probe into the dispute between the parties and the NCLT has rightfully come to the conclusion that the twin requirements of 'debt' and 'default' on part of the Corporate Debtor has been satisfied on the basis of several documents including the record of default of the information utility, NeSL, the statement of accounts of the Corporate Debtor and the balance sheets of the Corporate Debtor.
64. R1-UBI contends that the Corporate Debtor's contention that the Section 7 Petition deserves to be dismissed on the ground of breaches committed by other lenders and NHAI is misconceived. The rights and obligations of the Lenders under the Common Loan Agreement (CLA) are Company Appeal (AT)(Insolvency) No. 44 of 2025 37 of 99 several and UBI is thus not liable for the obligations of the other Lenders. The Appellant has alleged that the defaults committed by the Corporate Debtor in repayment were due to the non-disbursement of sanctioned amounts by other lenders and NHAI. The said submission is misconceived as the Respondent No. 1 cannot be held responsible for the acts and omissions of NHAI and the other lenders so long as there is existence of debt and default. Pertinently, the Corporate Debtor has not denied that the loan amounts disbursed by UBI to the Corporate Debtor were in accordance with the terms and conditions stipulated in the Loan Agreement (as amended from time to time) UBI has disbursed the sanctioned amounts in a timely manner. Therefore, UBI has not committed any breach in terms the Loan Agreement.
65. The disputes between the Corporate Debtor and NHAI under the Concession Agreement and certain lenders not disbursing their commitment are contractual disputes which have no bearing on the Corporate Debtor's obligations to the Respondent No. 1 under the Loan Agreement between the Corporate Debtor and the Respondent No. 1. The Respondent No. 1 had in its capacity as a lender, has not committed any breach of contract i.e. the Common Loan Agreement and had disbursed the loans according to the terms of the Common Loan Agreement. The existence of 'debt' and 'default' has been established in the present case.
66. Further, the Appellant's contention that after the NHAI took over the Project with effect from 12.01.2023, NHAI was responsible for servicing the debts of the Corporate Debtor and NHAI allegedly induced the default is Company Appeal (AT)(Insolvency) No. 44 of 2025 38 of 99 misleading and baseless. It is reiterated that UBI and the lenders are not a party to the Concession Agreement neither is NHAI is party to the Loan Agreement. Therefore, the sole obligation to discharge the debt of the lenders including UBI was of the Corporate Debtor, and it was the Corporate Debtor's responsibility to arrange for funds to make the payment to the Respondent No. 1. The reliance placed by the Corporate Debtor on Clause 36.2.1 of the Concession Agreement to state that NHAI had the right to make withdrawals from the escrow account for meeting the costs incurred by it for remedying the cause of suspension and for defraying the expenses as per the waterfall mechanism mentioned in Clause 31.3 is entirely baseless. As stated by the Appellant himself, the amount pending in the escrow account was Rs. 25.41 crores approximately. As stated by NHAI in its Reply as per the Appellant/ Corporate Debtor in its various letters, work worth more than Rs. 100 crores is pending, which results in estimates much higher compared to the costs estimated as per the report procured by the NHAI for the purpose of remedying the cause of suspension i.e., incomplete works. Therefore, there cannot be said to be enough money available for servicing of debts in the said Escrow Account and there is no basis for the Appellant to claim that there is sufficient fund available for repayment of banks' loans. Thus, the default is well established as far the Corporate Debtor's financial obligations to the Respondent No. 1 and other lenders are concerned. It is absolutely incorrect to say that there are sufficient funds available in the escrow account for defraying the expenses of completion of the project and also for repayment to banks of the Corporate Debtor.
Company Appeal (AT)(Insolvency) No. 44 of 2025 39 of 99
67. In fact, a similar argument, made by the Appellant was rejected in a recent judgment, that sufficient funds were available in the escrow account and the PMC having financial creditors nominees as members, were to be blamed for nonpayment to the financial creditors, in Sandeep Jain vs. IDBI Trusteeship Services Ltd. & Anr. 2025 SCC OnLine NCLAT 286 (Paras 17 and 21).
68. Further, this Hon'ble Tribunal in Deepak Raheja and Another vs. Omkara Assets Reconstruction Pvt. Ltd. and Another, 2025 SCC OnLine NCLAT 1287 whereby an argument was made that the amount in the Retention Account was enough to repay the debt of the lenders, this Hon'ble Tribunal held as follows:
'Para 21...Due to non-disbursement, there was no liability towards Rs.3 crores. The interest and disbursement of Rs.3 crores could also include interest liabilities. Hence, the findings of the Adjudicating Authority that even assuming the balance amount of Rs.3 crores in DSRA is utilized, the default shall still continue, are the findings based on consideration of all relevant facts and cannot be faulted.'
69. In view of our foregoing discussions, the Adjudicating Authority in the impugned order after considering all relevant facts on the record, including the Statement of Accounts and the materials placed by both the parties, has returned finding that date of default is 15.11.2022 and has also upheld the loan recall notice dated 15.02.2023 and other circumstances, under which the CDs need resolution has also been considered by the Adjudicating Authority, as noted above.
Company Appeal (AT)(Insolvency) No. 44 of 2025 40 of 99
70. Therefore, it is reiterated that it is settled principle of law that if the debt is due and payable and the Corporate Debtor has defaulted in repayment, the NCLT is not required to examine the reason for the occurrence of the said default.
71. It is also well settled that the objective of the code which is a beneficial legislation was enacted for facilitating banks to move towards early resolution of problem assets as an effective legal framework for timely resolution of insolvency and bankruptcy will support the development of credit markets, encourage entrepreneurship, improve ease of doing business, and facilitate more investments leading to higher economic growth and development (Swiss Ribbons vs. Union of India, WP (Civil) No. 99 of 2018).
72. Further, so far as the Appellant's contention that the Project was marred by the non-disbursement of shares by the lenders is concerned, it is that are individual and several for all intents and purposes and UBI cannot be held responsible for non-disbursement by the other lenders. Clause 2.1B of the First Novation to the Loan Agreement states that:
'NATURE OF RIGHTS AND OBLIGATIONS OF THE RUPEE LENDERS The obligations of each of the Rupee Lenders hereunder are several. No Rupee Lender shall be responsible for the obligations of any other Rupee Lender'.
73. In an arrangement such as the present one, it is fundamental that a lender is only responsible for its own obligations and if a lender fails to perform their obligations under the arrangement, the other lenders cannot be Company Appeal (AT)(Insolvency) No. 44 of 2025 41 of 99 held responsible for the same. Therefore, UBI cannot be held responsible for the failure on part of the other Lender(s) to fulfil their obligations under the Loan Agreement.
74. R1-UBI further contends that the Appellant's contention that it has terminated the Concession Agreement and the Termination Payment payable by the NHAI will be sufficient to discharge the debt of the lenders, is baseless. The Corporate Debtor has further contended that it has sent the Termination Notice dated 19.07.2024, wherein the Corporate Debtor has sought to terminate the Concession Agreement and has demanded a Termination Payment to the tune of INR 1,445.60 Cr. from the NHAI in terms of Article 37.3.2 of the Concession Agreement.
75. It is pertinent to note that the said termination and the demand for termination payment has categorically been rejected by the NHAI in its reply dated 05.08.2024 and therefore, the Termination Notice has no significance.
76. In any case, upon the issuance of Notice of Default dated 10.05.2023 by UBI, the Corporate Debtor is not entitled to send a termination notice in terms of Clause 5 of the Substitution Agreement which is a tripartite Agreement. Clause 5.1 states as under:
"5. TERMINATION OF CONCESSION AGREEMENT Termination upon occurrence of Financial Default at any time after issue of a Notice of Financial Default, the lenders' Representative may by a notice in writing require the Authority to terminate the Concession Agreement forthwith, and upon receipt of such notice, the Authority shall undertake Company Appeal (AT)(Insolvency) No. 44 of 2025 42 of 99 Termination under and in accordance with the provisions of Article 37 of the Concession Agreement"
77. In this regard, reliance is placed on this Hon'ble Appellate Tribunal's recent judgment in Vikram Bhawanishankar Sharma Member of the Suspended Board of Directors of Supreme Manor Wada Bhiwandi Infrastructure Pvt. Ltd., v. Union Bank of India & Anr., Comp App. (AT) (Ins) No. 794 of 2023, whereby in a similar case, it was held that the:
'Appellant's contention that the termination of the Concession Agreement by the Government of Maharashtra has resulted in shifting of liability upon the Government of Maharashtra, the same cannot be made the basis for dismissing the application because the liability was enjoined upon the corporate debtor to make the payment to the financial creditor' (Para 30).
78. Assuming without admitting that the termination is given effect to, the quantum of the termination payment and when such payment will be received by the corporate Debtor is a mere contingency which cannot come in way of admission of the Corporate Debtor. Pertinently, the NHAI has a standard formula for calculating 'termination payment' in cases such as the present one and therefore, even assuming that certain amount is payable by the NHAI to the Corporate Debtor, the exact quantum of such amount cannot possibly be ascertained at this stage.
79. Further, the Respondent No. 1 which is a public sector bank cannot be expected to wait till the conclusion of the arbitration proceedings between the Corporate Debtor and the NHAI to recover public money in case of clear "debt" Company Appeal (AT)(Insolvency) No. 44 of 2025 43 of 99 and "default" under the provisions of the Code. Pertinently, the Respondent No. 1 is not even a party to the arbitration proceedings.
80. R1-UBI further contends that the Appellant's contention that the present case is a case of malicious initiation of CIRP by the Respondent No. 1 is malafide and without any merit. The contention of the Appellant that the present case is a case of malicious initiation of CIRP by the Respondent No. 1 is malafide and the Appellant must be put to strict proof by this Hon'ble Tribunal. The Appellant's reliance on Section 65 of the Code on the ground that NHAI and UBI induced a default on part of the Corporate Debtor is without any merit.
81. In light of the reasons stated hereinabove, the Respondent No. 1 prays that this Hon'ble Appellate Tribunal may be pleased to dismiss the present Appeal and uphold the Admission Order.
Submissions of NHAI-R3
82. The present appeal has been filed by suspended director of the Corporate Debtor ('CD') inter alia alleging that 'termination payment' due from NHAI to CD which would be sufficient to make payment to CD's financial creditors including Respondent No. 1. NHAI has been impleaded as a respondent no 3 vide order dated 13.01.2025 passed by this Hon'ble Appellate Tribunal. NHAI -R3 contends that there is no relevance of contract of CD and NHAI. The issues relevant in a petition under Section 7 of IBC are only debt and default. As alleged by the Appellant, the cause of default is alleged non- payment by NHAI but 'cause of default' as a concept is not relevant in the present proceedings. All issues between NHAI and CD including the Company Appeal (AT)(Insolvency) No. 44 of 2025 44 of 99 performance of the contract and payments are pending in arbitration between the parties.
83. NHAI -R3 further contends that no privity of contract between Bank and NHAI. NHAI is a third party to the transaction between CD and Respondent No. 1. There is neither privity of contract for payment of dues between the Bank and the NHAI nor is there any clause of any agreement to say that NHAI becomes liable to pay the Bank/R1. The NHAI is concerned with construction of highway for which the tender was awarded and the relevant agreement is the Concession Agreement dated 29.02.2012 between NHAI and the CD. The agreement between Bank and the CD is the loan agreement to which the NHAI is not a party even though loan is granted for funding of the project.
84. The Appellant has argued that there is a 'Substitution Agreement', which is a tripartite agreement between the CD, NHAI and R1. While the same is in fact a tripartite agreement, there is no obligation on any party to make payments under this Substitution Agreement. The Substitution Agreement is an option provided to the lenders of the CD to substitute the CD with a Nominated Entity in case of 'Event of Financial Default' (Clause 3.2) by the CD. Payment obligations do not arise under the Substitution Agreement.
85. On the issue of Termination, NHAI -R3 contends that Appellant has submitted that it issued termination notice on 19.07.2024. However, this notice was issued without following due procedure prescribed in Clause 37.2 of the Concession Agreement which provides for issuance of cure period of 90 Company Appeal (AT)(Insolvency) No. 44 of 2025 45 of 99 days prior to termination. Therefore, on this ground itself termination letter dated 19.07.2024 is not valid. NHAI had replied to termination notice vide letter dated 05.08.2024 and had sent a 54-page response denying to correctness of termination. Therefore, this termination does not entitle the CD to any termination payment.
86. On the issue of Suspension and Deemed Termination Appellant has relied on clause 36.5.2 of the Concession agreement to say that there is deemed termination since the suspension is not revoked within 180 days. NHAI -R3 contends that the facts do not support such contention. There were two suspensions of the CD under two agreements:
(i) Suspension from 12.01.2023 to 09.10.2023 (about 180 days till 11.07.2023 and 90 days extension permissible in clause 36.1 till 09.10.2023). This suspension took place under clause 36.1 of the Concession Agreement. Since this suspension period did not cross permissible time of 180+90 days there is no deemed termination.
(ii) Second suspension took place between 10.10.2023 to 06.07.2024 (180 +90 days) since request was received by NHAI from the lenders under the Substitution Agreement for starting the process of substitution. This was recorded by NHAI in letter dated 06.10.2023. Clause 3.2.3 of the Substitution agreement authorizes the Lenders to request suspension and NHAI granted such request on 06.10.2023. This period also did not extend the permitted period and hence there is no deemed termination.
87. Once there is no deemed termination, CD does not become entitled to 'termination payment'. Pertinently, the CD itself withdrew its application before the Arbitrator challenging the correctness of suspension. Company Appeal (AT)(Insolvency) No. 44 of 2025 46 of 99
88. On the issue of Payment during suspension the Appellant has argued that the NHAI has taken the money earned by tolling, etc during suspension and has used the same instead of paying the debts. During suspension, NHAI
-R3 contends that it has awarded work to contractors and has got the project completed.
89. NHAI -R3 further contends that once the suspension kicked in, the toll collection was taken over by NHAI. Appellant has argued that per Clause 36 of the Concession Agreement NHAI ought to have continued paying debts of the Corporate Debtor from such toll collected. As per clause 36.2.1 on suspension, NHAI has the right to make withdrawals from the Escrow account for meeting the costs incurred by it for remedying and rectifying the cause of suspension and thereafter for defraying the expenses mentioned in clause 31.3 (priority of payment). NHAI wrote letter dated 14.11.2022 that it needed more money than available for costs of the project. Therefore, no payments o R1 or banks could be made during suspension.
90. In fact, so as to help the Appellant, NHAI had requested the Banks to disburse further funds and defer repayment obligation of the CD but the Bank replied that they cannot waive or suspend debt servicing obligations of the Company (Para (b) of letter dated 01.12.2022.
91. On the issue of Default NHAI -R3 contends that CD was in default with its banks from December 2019 (letter dated 17.09.2022, second para. This is prior to the suspension by NHAI and hence it is not correct to say that NHAI caused default by the CD. Admittedly this default was not with NHAI but as Company Appeal (AT)(Insolvency) No. 44 of 2025 47 of 99 far as NHAI is concerned, the said letter shows default was by CD with its bankers prior to suspension.
92. In fact, the suspension was due to the CD not carrying out its obligations under the concession Agreement. the poor progress of the project can seen from NHAI's letter dated 05.08.2024.
93. Therefore, it is most humbly submitted that no money is due from NHAI to lenders of CD and that NHAI is not responsible for dent and default by the CD. The issues between the CD and the NHAI are pending in arbitration. Accordingly, it is most humbly prayed that this Hon'ble Appellate Tribunal may decide the present appeal in accordance with the IBC and the applicable law.
Appraisal
94. This appeal arises against the order dated 20.12.2024 passed by the National Company Law Tribunal, Kolkata Bench, admitting the insolvency petition filed by Union Bank of India under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against Solapur Tollways Projects Limited (STPL). The appellant, a suspended director of STPL, challenges this order mainly on the grounds that (a) no default exists, (b) the default is contrived by NHAI and the lenders, and (c) the termination of the concession agreement terminated STPL's liabilities, thereby barring insolvency proceedings.
95. For better appreciation of the case in hand, here is the chronology of key events in the insolvency proceedings:
Company Appeal (AT)(Insolvency) No. 44 of 2025 48 of 99 29.02.2012: Concession Agreement entered between NHAI and Solapur Tollways Projects Limited (STPL) for development, operation, and maintenance of a highway project, NH-9. 03.08.2013: Union Bank of India (UBI) and STPL entered into a Rupee Term Loan Agreement for Rs. 588.42 crore to carry out the project; NHAI was not a party to this Loan Agreement. 04.09.2013: Substitution Agreement executed by UBI, STPL, and NHAI, allowing substitution of STPL by a nominated company upon financial default, with no payment obligation on NHAI towards lenders.
Various dates 2013-2016: Several amendments and novations to the Loan Agreement adjusting the lenders and commitments. 27.09.2018: Scheduled Commercial Operation Date (SCOD) shifted to 29.11.2018; first repayment installment rescheduled to 30.09.2019.
19.08.2019: UBI sent correspondence regarding overdue payments; STPL's loan account moved to default status (SMA-
0).
25.09.2019: UBI issued financial default notice and initiation of recovery actions; STPL failed to service interest since 31.07.2019, triggering an event of default under the Loan Agreement.
22.11.2019: Further amendment shifting SCOD to 12.10.2019 and first repayment instalment to 31.07.2020.
31.12.2019: STPL's account with IIFCL declared Non-
Performing Asset (NPA).
07.07.2020: Lenders' meeting noting STPL's persistent overdue interest.
23.03.2021: SCOD further shifted to 28.11.2019; first principal repayment instalment shifted to 30.09.2020.
14.09.2021: NHAI issued notice suspending the Concessionaire under Clause 36.1 of the Concession Agreement, citing defaults by STPL.
31.12.2021: NHAI issued another suspension notice under Clause 36.1.
17.09.2022: Financial Creditor (FC) wrote to NHAI supporting project completion if extended and granting premium deferment. 12.01.2023: Suspension of Concession took effect; NHAI took over the project for completion and also took control of escrow account; suspension continued till 09.10.2023 after extension. 04.02.2023: UBI sent default cum recall notice demanding Rs.
186.10 crore principal and Rs. 2.10 crore interest as on 31.03.2023.
06.04.2023: STPL responded denying default citing non-
disbursement by other lenders and NHAI breaches.
Company Appeal (AT)(Insolvency) No. 44 of 2025 49 of 99 10.05.2023: UBI declared financial default and issued notice of 'event of default' under Loan and Substitution Agreements; attempted substitution of STPL by nominated company failed. 20.06.2023: STPL replied blaming project non-completion on NHAI and lenders.
10.10.2023: NHAI suspended STPL's rights under the Concession Agreement for 270 days till 06.07.2024. 29.10.2023: STPL's loan account declared as NPA by UBI. 01.02.2024: UBI filed Section 7 insolvency petition for default of Rs. 184.23 crore principal and Rs. 11.31 crore interest. 06.07.2024: Suspension period ended; STPL resumed obligations.
19.07.2024: STPL issued termination notice to NHAI demanding termination payment of Rs. 1,445.60 crore under Article 37.3.2 of Concession Agreement.
05.08.2024: NHAI rejected termination notice, claiming it invalid and rejecting termination payment claim.
17.10.2024: STPL filed Section 9 petition before Delhi High Court seeking termination payment security; petition dismissed on 23.10.2024.
20.12.2024: NCLT admitted insolvency petition; interim resolution professional (IRP) appointed.
23.12.2024: Public announcement inviting claims issued by IRP.
07.01.2025: Appeal against admission order filed by STPL's suspended director.
10.01.2025: IRP constituted Committee of Creditors (CoC) including IIFCL (35.28%), UBI (33.55%), Punjab National Bank (17.36%), Bank of Baroda (8.61%), and Canara Bank (4.93%).
96. It is to be noted that in this case on 13.01.2025 the following interim orders were issued.
"Learned Counsel for the Appellant is permitted to implead the NHAI as Respondent No.3. The Amended Memo of Parties be filed within three days. Mr. Krishnendu Datta, Learned Senior Counsel appears for Respondent No.1. Learned Counsel accepts notice for Respondent No.2. Issue Notice for newly impleaded Respondent No.3. Let Reply be filed within two weeks. Rejoinder, if any, be filed before the next date. List this Appeal on 17.02.2025. IRP may submit a status report regarding the steps taken in CIRP on the next date. In the meantime, no plans shall be considered."
Company Appeal (AT)(Insolvency) No. 44 of 2025 50 of 99
97. RP in his reply has informed us that he had received 27 EOI's from the prospective resolution applicants (PRAs) and finally twenty-four were shortlisted. Later on, Resolution plans have been received from only three PRA's. RP also brings to our notice that the appellant is misleading this tribunal as Hon'ble High Court of Delhi in OMP(I)(COMM) 361/2014 has held that the termination of the concession agreement with NHAI will be adjudicated by the learned arbitrator when appointed. By stating that the termination of the concession agreement with NHAI has attained the finality, the appellant is misleading the tribunal.
98. RP also brings to our notice that the basic grievance of the appellant is that the CD through RP is not proceeding on the termination payout claims and therefore has hampered recovery of the CD. RP brings to our notice that the same position was taken by the CD in the Section 7 proceedings before the adjudicating authority. RP claims that it has taken appropriate advice and reviewed the existing pleadings and also held a meeting with NHAI, wherein NHAI has told him that there has been no termination of the Concessionaire Agreement as in terms of the concession agreement, the CD was required to take approval of the lenders and no such confirmation or approval was taken. RP is of the view that the concessionaire may have been restricted at that time from invoking an authority of event of default under the terms of the concession agreement. RP also claims that from the available documents available it can be understood that the termination was against the provisions of the concession agreement.
Company Appeal (AT)(Insolvency) No. 44 of 2025 51 of 99
99. RP also brings to our notice that as per the order dated January 13, 2025 passed by this Appellate Tribunal imposing restriction on considering plans, it had received the plans but the COC will take necessary steps for evaluating and considering the plans after the orders of the Appellate authority. RP also brings to our notice that RP is acting to preserve the corporate debtor as a going concern and to facilitate the resolution process in a manner consistent with the objectives of the code.
100. Some important dates post interim order dated 13.01.2025 are as follows:
22.01.2025: IRP received 27 Expressions of Interest (EOIs) from prospective resolution applicants (PRAs); final list included 24 PRAs.
16.03.2025: Resolution Professional (RP) issued Request for Resolution Plans (RFRP), evaluation matrix, and Information Memorandum.
10.07.2025: Resolution plans received from three PRAs.
101. Briefly recapitulating, Appellant contends that this is a case of contrived default, where despite monies being available, default has been falsely claimed and imposed by the National Highway Authority of India (NHAI) and the lenders including NHAI. Appellant doesn't deny debt but denies default by the CD. Appellant further claims that STPL is a special purpose vehicle incorporated solely for the highway project (Solapur to Maharashtra- Karnataka border on NH-9). Its only asset was the Concession Agreement dated 29.02.2012 with NHAI, which already stands terminated by the Corporate Debtor (through a notice dated 19.07.2024), with disputes pending between the parties. With the termination of the Concession Agreement, the Company Appeal (AT)(Insolvency) No. 44 of 2025 52 of 99 Corporate Debtor ceased to be a going concern, making it an unfit case for initiation of Corporate Insolvency Resolution Process (CIRP). Appellant claims that there have been several breaches by both NHAI and Lenders, even though the Corporate Debtor had fulfilled its obligations under the Concession Agreement and the Common Loan Agreement dated 03.08.2013. NHAI suspended STPL's rights under the Concession Agreement effective 12.01.2023 and took control of the escrow account from which debts were serviced. Under Articles 36.2.1 and 31.3.1 of the Concession Agreement, NHAI was obliged to defray expenses including debt servicing during suspension, which it failed to do, leading to the insolvency petition. Prior to suspension, the Corporate Debtor was timely servicing debts, and default occurred only after NHAI assumed control, despite sufficient money in the escrow account. NHAI should have serviced the debt, which it did not. Appellant also contends that it is a case of manufactured default and malicious initiation and claims the default was manufactured and foisted by the complicity of NHAI and the lenders. Furthermore, the insolvency petition is allegedly a malicious misuse of the IBC intended not for debt resolution but to push the Corporate Debtor into insolvency unlawfully. The Concession Agreement, Loan Agreement, and Substitution Agreement constitute one consolidated transaction and must be read together. The Loan Agreement cannot be considered in isolation to claim default. Provisions of the Concession Agreement provide for Termination Payments (Clauses 37.3.1 and 37.3.2) securing lenders' interests both on termination due to Corporate Debtor default or NHAI default. Termination Payments are assured payments and are payable irrespective of disputes, as Company Appeal (AT)(Insolvency) No. 44 of 2025 53 of 99 affirmed by judicial precedents such as Jetpur Somnath Tollways Limited v. NHAI (2017 SCC Online Del HC 9453) and NHAI v. Punjab National Bank (2017 SCC Online Del 11312). iNHAI's contention that termination notice was not accepted and thus termination did not take effect is contrary to the express terms of the Concession Agreement, a terminable contract under Section 14 of the Specific Relief Act, 1963. Furthermore, Clause 36.5.2 provides for automatic termination upon expiry of suspension beyond stipulated period. NHAI's denial is a contrived attempt to avoid liability for Termination Payments and keep insolvency proceedings alive. Appellant claims that NCLT erred in admitting the petition purely on records from information utilities and balance sheets without appreciating that default is disputable and not unequivocal. Furthermore, the claim of NHAI that there were insufficient funds is a contrivance since correspondence shows INR 171 crores were available. The debt became non-performing only after suspension and is attributable to NHAI's failure to disburse. Appellant also claims that delays are not attributable to Corporate Debtor, but they were caused by NHAI's failure to hand over land, delays in issuing provisional completion certificate, and other defaults. Despite taking control, NHAI managed only 5- 7% progress on the project. Corporate Debtor was entitled to deferment of premium and extension of time referenced in NHAI's own notifications and independent engineer's report. Appellant claims it to be an abuse of IBC process since the Corporate Debtor is not in default but was pushed into insolvency by external factors. Termination Payments provide adequate recovery to lenders; thus, insolvency process is unnecessary. Appellant also Company Appeal (AT)(Insolvency) No. 44 of 2025 54 of 99 places reliance on Swiss Ribbons Pvt Ltd v. Union of India (2019 SCC 17) and ILFS Financial Services v. Adhunik Meghalaya Steel Private Ltd (2025 SCC Online SC 1567) to argue that default is a condition precedent and must be proved. Section 3(12) (definition of default) and Section 7(5) (allowing admission only when default is established) of the IBC mandate thorough scrutiny of default existence. Thus, the insolvency petition was erroneously admitted without proper consideration of contractual safeguards, the role of NHAI, and absence of genuine default, warranting dismissal of the insolvency proceedings against Solapur Tollways Projects Limited.
102. Strongly rebutting the contentions of the Appellant-Union Bank of India Respondent 1 and FC contends that the appeal filed by the suspended director deserves to be dismissed. This case has clear existence of "debt" and "default" on the part of the Corporate Debtor, warranting CIRP initiation. The NCLT correctly observed in paragraph 45 of the admission order that once the adjudicating authority is satisfied that a debt is due and payable and default has occurred, the petition under Section 7 must be admitted, without probing into disputes between parties. This conclusion is supported by several documents including the information utility's record of default (NeSL), statement of accounts, and balance sheets of STPL. FC-UBI also relies on judgments of the Hon'ble Supreme Court including Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407, ES Krishnamurthy v. M/s Bharath Hi Tech Builders (2022) 3 SCC 161 and Suresh Kumar Reddy vs. Canara Bank & Ors., (2023) 8 SCC 387. STPL itself confirmed its debt balances through Debit Balance Confirmation Letters dated 28.03.2018, 06.04.2022, Company Appeal (AT)(Insolvency) No. 44 of 2025 55 of 99 and 31.03.2023, and a Letter of Confirmation dated 29.05.2019. Evidence of default is apparent from the authenticated information utility reports, Audit Reports for FY 2022-23 showing default in principal and interest repayment and financial statements revealing STPL's grave financial distress (Finance cost INR 11,742 lakhs vs. loss INR 14,720 lakhs). Statements of account show repeated late and non-payment of dues. The corporate debtor's default is thus unequivocal. UBI-FC further contends that the appellant's claim of contrived default, allegedly manufactured due to suspension by NHAI or breaches by other lenders, is immaterial. It is undisputed that STPL defaulted beginning 2019. Moreover, the financial creditor (UBI) cannot be held liable for others' defaults. The adjudicating authority is not to examine causation but merely existence of default, per established law. UBI, thus, out rightly rejects Appellant's "contrived default". UBI further contends that disputes regarding non-disbursement by other lenders or NHAI's actions under the Concession Agreement are contractual and do not absolve STPL of its obligations under the Loan Agreement with UBI. UBI's loan disbursements complied with agreed terms and were made timely (Clause 2.1B of First Novation Agreement clarifies lenders' obligations are several, not joint). Hence, STPL's non-payment is independent of these disputes. UBI contends that the Appellant's claim that NHAI which was having control over escrow funds is responsible for default is baseless. The escrow closing balance was about Rs. 25.41 crores, while NHAI stated project work exceeding Rs. 100 crore was pending, negating sufficiency of funds for debt servicing. The contention of sufficient funds for loan repayment is incorrect. UBI also brings to our notice that STPL's termination Company Appeal (AT)(Insolvency) No. 44 of 2025 56 of 99 notice dated 19.07.2024 and claim for termination payment of INR 1,445.60 crores under Article 37.3.2 of the Concession Agreement has been categorically rejected by NHAI (Reply dated 05.08.2024). Moreover, under Clause 5.1 of the Substitution Agreement, post issuance of Notice of Financial Default, lenders' representative can require the authority to terminate the concession. Hence, termination notice sent by STPL lacks effect as it came after a default notice. Even if termination were effective, the quantum and receipt of termination payment are contingent and cannot delay insolvency admission. UBI, as a public sector bank, cannot await arbitration conclusion to recover public money. UBI is not a party to these arbitration proceedings. UBI strongly rejects the appellant's baseless and malafide allegations of malicious initiation of CIRP. Proof of fraud or malicious intent (Section 65 IBC) is required, which the appellant has not demonstrated. UBI's conduct as a public sector bank managing public funds should not be impugned without evidence. UBI prays for dismissal of the appeal and claims that the Admission Order is valid and correct as the case shows a clear existence of "debt" and "default" by STPL warranting admission under Section 7, citing Hon'ble Supreme Court precedents including Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407 and ES Krishnamurthy v. Bharath Hi Tech Builders (2022) 3 SCC 161. The contention of the appellant that default was contrived by the National Highways Authority of India (NHAI) imposing an illegal suspension and that project breaches were caused by lenders is baseless. The Adjudicating Authority is not required to investigate reasons for default once debt and default are established as per settled law. Further the Company Appeal (AT)(Insolvency) No. 44 of 2025 57 of 99 Common Loan Agreement was amended four times till 2016 and further in subsequent years (Sept 2018, Nov 2019, March 2021) to reschedule payments and commercial operation dates (SCOD). From August 19, 2019, UBI issued notices regarding overdue payments by STPL. The Loan Agreement provisions require quarterly instalment repayments beginning June 30, 2016, and monthly payment of interest as per Clauses 2.6 and 3.1.1. Due to STPL's continuous default in principal and interest payments, UBI issued a default cum recall notice on 04.02.2023 demanding repayment of INR 186.10 crores (principal) and INR 2.10 crores (interest) outstanding as of 31.01.2023. STPL acknowledged default in their letter dated 06.04.2023. UBI issued event of default notice on 10.05.2023 and attempted substitution under the Substitution Agreement on 04.09.2013. STPL's loan account was classified as Non-Performing Asset with RBI on 29.10.2023. UBI filed the Section 7 insolvency petition on 01.02.2024 based on default amount of approximately INR 191.40 crores (principal + interest). The appellant's claim that the default is illegitimate and caused by NHAI controlling escrow accounts is rejected because funds available in escrow at suspension (January 12, 2023) were minimal, insufficient to cover debt dues. The appellant's reliance on the Concession Agreement's termination and expected termination payment of INR 1445.60 crores from NHAI to clear debt is misplaced. NHAI denies legality of termination notice dated 19.07.2024 and the termination payment claim. As per Clause 9.2 of the Common Loan Agreement, UBI exercised the right to recall the loan on default by STP. The Corporate Debtor's claim that it is a Special Purpose Vehicle without tangible assets beyond arbitration claims and Company Appeal (AT)(Insolvency) No. 44 of 2025 58 of 99 hence not resolvable under IBC is rejected. The Code's objective is early resolution and revival; many SPVs have been resolved under the Code. The NCLAT in Vineet Khosla vs. Edelweiss Asset Reconstruction Co. Ltd. held the adjudicating authority is not to consider whether resolution is possible at admission stage. Respondent-UBI-FC also brings to our attention that the Corporate Debtor's attempt to interject arbitration proceedings to delay insolvency is not legally tenable. Section 7 proceedings are summary and cannot be stayed pending arbitration (citing Century Aluminium Co. Ltd. v. Religare Finvest Ltd. and Indus Biotech Pvt. Ltd. v. Kotak India Venture). The Adjudicating Authority and Tribunal are not courts of equity but must strictly follow the IBC provisions. The appeal is filed with mala fide intention to derail CIRP lacks merit and should be dismissed with costs. NHAI contends that the issues relevant in a petition under Section 7 of the IBC are only debt and default. The appellant's argument that the cause of default is alleged non- payment by NHAI is irrelevant, as the concept of "cause of default" is not a consideration in IBC proceedings. All disputes between NHAI and STPL, including contract performance and payments, are pending in arbitration and do not affect the validity of the insolvency petition.
103. NHAI, which has signed the concession agreement, and emphasizes that there is no privity of contract between the bank (Union Bank of India) and NHAI. The Concession Agreement dated 29.02.2012 is between NHAI and STPL, while the loan agreement is between STPL and the bank. NHAI is not a party to the loan agreement, and there is no clause in any agreement making NHAI liable to pay the bank. The Substitution Agreement, though tripartite, Company Appeal (AT)(Insolvency) No. 44 of 2025 59 of 99 only provides an option to lenders to substitute STPL in case of an Event of Financial Default (Clause 3.2), but does not create any payment obligation on NHAI. The Appellant claims to have issued a termination notice on 19.07.2024. However, NHAI argues that this notice was issued without following the due procedure prescribed in Clause 37.2 of the Concession Agreement, which requires a cure period of 90 days prior to termination. NHAI responded to the termination notice by letter dated 05.08.2024, rejecting its validity and providing a detailed 54-page response. Therefore, the termination notice does not entitle STPL to any termination payment. The appellant relies on Clause 36.5.2 of the Concession Agreement, claiming deemed termination since the suspension was not revoked within 180 days. NHAI counters that there were two suspensions:
First suspension: 12.01.2023 to 09.10.2023 (under Clause 36.1), which did not exceed the permissible period of 180+90 days, so no deemed termination occurred.
Second suspension: 10.10.2023 to 06.07.2024 (under Clause 3.2.3 of the Substitution Agreement), also within the permitted period, so no deemed termination.
104. NHAI also brings to our notice that STPL itself withdrew its application before the arbitrator challenging the correctness of suspension, further undermining the claim of deemed termination. The Appellant argues that NHAI collected toll revenue during suspension and should have used it to pay STPL's debts. NHAI contends that under Clause 36.2.1, upon suspension, NHAI has the right to withdraw from the Escrow account to meet costs incurred for remedying the cause of suspension, and only thereafter for Company Appeal (AT)(Insolvency) No. 44 of 2025 60 of 99 defraying expenses mentioned in Clause 31.3. NHAI's letter dated 14.11.2022 stated that more funds were needed for project costs, so no payments to the bank or lenders could be made during suspension. NHAI also notes that it requested the banks to disburse further funds and defer repayment obligations, but the banks refused, stating they could not waive or suspend debt servicing obligations. NHAI asserts that STPL was in default with its banks from December 2019, as confirmed by a letter dated 17.09.2022. This default predates NHAI's suspension and was not caused by NHAI. The suspension was due to STPL's failure to carry out its obligations under the Concession Agreement, as evidenced by poor project progress. NHAI contends that no money is due from NHAI to the lenders of STPL, and NHAI is not responsible for the default by STPL. All issues between NHAI and STPL are pending in arbitration. NHAI prays that the appeal be decided in accordance with the IBC and applicable law.
Issues for Consideration:
105. We have heard all sides and also perused materials placed on record.
The main issues for our consideration are:
o Whether a "debt" and "default" exist within the meaning of the IBC so as to warrant admission of the petition.
o Whether the appellant's allegation of contrived default due to NHAI's control of escrow is sustainable.
o Impact of the termination of the concession agreement on STPL's insolvency liability.
o Whether the adjudicating authority erred in admitting the petition without investigating disputes between parties.
Company Appeal (AT)(Insolvency) No. 44 of 2025 61 of 99
106. All these issues being interrelated have been evaluated together hereinafter by us. First issue is whether a "debt" and "default" exist within the meaning of the IBC so as to warrant admission of the petition. Debt is admitted but there is dispute raised by the Appellant regarding default and we delve into the issue whether we look into the reasons for default while admitting Section 7 proceedings at this stage.
"Debt" and "default" and "Contrived Default"
107. Before proceeding further, it will be instructive to extract the section seven of IBC 2016:
"IBC Section 7-Initiation of corporate insolvency resolution process by financial creditor.
(1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government, may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.
Provided that for the financial creditors, referred to in clauses
(a) and (b) of the sub-section (6A) of the section 21, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten percent. of the total number of such creditors in the same class, whichever is less:
Provided further that for the financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten percent. of the total number of such allottees under the same real estate project, whichever is less:
Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, such application shall be modified to comply with the Company Appeal (AT)(Insolvency) No. 44 of 2025 62 of 99 requirements of the first or second provisos as the case may be within thirty days of the commencement of the said Ordinance, failing which the application shall be deemed to be withdrawn before its admission.
Explanation.--For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.
(2) XXX (3) The financial creditor shall, along with the application furnish--
(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution professional; and
(c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).
Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same. (5) Where the Adjudicating Authority is satisfied that--
(a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or
(b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority."
108. The above provisions are very clear that adjudicating authority has hardly any discretion to refuse admission and once it is satisfied of default, Company Appeal (AT)(Insolvency) No. 44 of 2025 63 of 99 admission of the application under Section 7 is a natural consequence. Admittedly the debt is not being questioned. Only the default is being questioned and it is claimed that it is not due to the CD. It is claimed that it is due to suspension and termination of concession agreement by NHAI and also due breeches by both NHAI and lenders. UBI brings to our notice that after multiple restructurings by the Bank and also after the account was declared as SMA0 and then later on as NPA section 7 proceedings were initiated. It will be useful to note these events to the background in which the action was initiated by the financial creditor and for that reason they are being reproduced as follows:
12.12.2014 First Amendment and Novation Agreement to the Loan Agreement was entered into whereby the following transpired:
(i) UBI released and discharged itself from the rights and obligations under the Loan Agreement to the extent of its novated commitment of Rs.
160 cr. to India Infrastructure Finance Company Limited ("IIFCL").
(ii) CPL ceased to be a sponsor to the Project.
SREI and its associates/affiliates were accorded the approval to become a sponsor to the Project.
21.04.2015 Second Amendment and Novation Agreement to the Loan Agreement was entered into whereby UBI released and discharged itself from the rights and obligations under the Loan Agreement to the extent of novated commitment of Rs. 100 cr. to Oriental Bank of Commerce ("OBC") and Rs. 128.42 cr. to SREI.
03.06.2015 In accordance with Clause 5.7 of the Loan Agreement (Disbursement), UBI made a disbursement of INR 174,00,28,128 in favour of the Corporate Debtor in 43 instalments as evident from the statement of accounts of the Corporate Debtor.
Company Appeal (AT)(Insolvency) No. 44 of 2025 64 of 99 19.10.2015 Third Amendment and Novation Agreement to the Loan Agreement was entered into wherein SREI released and discharged itself from the rights and obligations under the Loan Agreement to the extent of novated commitment of Rs. 50 cr. to Vijaya Bank.
15.02.2016 Fourth Amendment and Novation Agreement to the Loan Agreement was entered. Subsequent to the novation of the debt, the commitment for the various lenders stood as follows:
S. Name of the Lender Commitment
No
1. Union Bank of India INR 200 Cr.
2. India Infrastructure INR 160 Cr.
Finance Company
Limited
3. Punjab National Bank INR 100 Cr.
(erstwhile Oriental
Bank of Commerce)
4. SIFL INR 50 Cr.
5. Bank of Baroda INR 50 Cr.
(erstwhile Vijaya Bank)
6. Canara Bank (erstwhile INR 28.42 Cr.
Syndicate Bank)
Note: The principal amount so disbursed was to
be repaid in accordance with the Amortisation
Schedule, as per which the date of repayment of
first instalment by the Corporate Debtor was
30.09.2017
27.09.2018 Fifth Amendment Agreement to the Loan
Agreement was entered into whereby the
Scheduled Commercial Operation Date ("SCOD")
of the Project was shifted to 29.11.2018, and the
date of repayment of first instalment of the
principal under the Loan Agreement was shifted
to 30.09.2019, at the request of the Corporate
Debtor.
19.08.2019 Correspondence by UBI to the Corporate Debtor
for regularization of overdue in the loan account
of the Corporate Debtor. The account of the
Corporate Debtor moved to default status in
CRILC and classified as SMA-0.
Company Appeal (AT)(Insolvency) No. 44 of 2025 65 of 99
25.09.2019 Correspondences by UBI to the Corporate Debtor
issuing financial default notice and intimating of initiation of recovery action upon the Corporate Debtor's account being classified as SMA - 1 account. It was also mentioned in the correspondence that the Corporate Debtor is in a continuous default in terms of the Loan Agreement and has failed to service the interest falling due since 31.07.2019 i.e. more than 45 days have passed despite several reminders and meetings, triggering an 'event of default' under the Loan Agreement.
22.11.2019 Sixth Amendment Agreement to the Loan Agreement was entered into whereby the SCOD was shifted to 12.10.2019, and the date of repayment of first instalment of the principal was further shifted to 31.07.2020, at the request of the Corporate Debtor.
22.11.2019 Meeting of the lenders of STPL was held whereby the Corporate Debtor was enquired about the status of fund infusion for debt servicing of the lenders for the month of July and August 2019 and the Corporate Debtor was requested to service the interest to prevent movement of the account to default category.
31.12.2019 The account of the Corporate Debtor maintained with IIFCL was declared as NPA.
07.07.2020 Meeting of the lenders of STPL was held whereby it was minutised that the account of the Corporate Debtor maintained with IIFCL was declared as NPA with effect form 31.12.2019 and the STPL is 'D' rated account with overdue interest for the month of February 2020 since there is persistent overdue in the account.
23.03.2021 Seventh Amendment Agreement to the Loan Agreement, was entered into whereby the SCOD was again shifted to 28.11.2019, and the date of repayment of first instalment of principal was further shifted to 30.09.2020, at the request of the Corporate Debtor.
Company Appeal (AT)(Insolvency) No. 44 of 2025 66 of 99 14.09.2021 NHAI issued the notice of suspension of the Concessionaire under Clause 36.1 of the Concession Agreement, suspending the Concessionaire's rights under the Concession Agreement on account of several defaults committed by the Corporate Debtor.
Appellant claims that in an application under Section 9 of the Arbitration and Conciliation Act, 1996, Hon'ble High Court of Delhi stayed suspension notice.
31.12.2021 NHAI issued another notice of suspension to the Concessionaire under Clause 36.1 of the Concession Agreement.
17.09.2022 A letter was written by FC to NHAI that CD remained capable of completing the project to the NHAI granting extension of time and deferment of premium to the CD.
12.01.2023 Due to the legal proceedings initiated by the Concessionaire before the Hon'ble High Court and Arbitration Tribunal, a stay was operating on the suspension of the Concession Agreement till 11.11.2022. NHAI' suspension under the Concession Agreement took effect only from 12.01.2023. In furtherance of the suspension, the Project was handed over to NHAI for completion of the balance works.
It was brought to our notice that the suspension continued from 12.01.2023 to 11.07.2023 (i.e. for a period of 180 days) in terms of Clauses 36.1, 36.2 and 36.3 of the Concession Agreement. The suspension period was extended by NHAI for a further period of 90 days i.e. till 09.10.2023. Appellant contends that the date of suspension taking effect, the CD had duly serviced the terms of the tenders. After the suspension taking effect from 12.01.2023, the NHAI came in control of the Escrow Account and was under an obligation to defray expenses in terms of the waterfall mechanism set out in Article 31 of the Concession Agreement.
Company Appeal (AT)(Insolvency) No. 44 of 2025 67 of 99 04.02.2023 Default cum Recall Notice was sent by UBI to STPL wherein UBI called upon STPL to pay INR 186.10 Crores (principal outstanding) and INR 2.10 Crores (interest outstanding) being due as on 31.03.2023, on account of the Corporate Debtor's failure to achieve the COD and other relevant milestones in the construction and implementation of the Project and failure to service the repayment obligations as per the terms of the Loan Agreement ("Default cum Recall Notice") 06.04.2023 Corporate Debtor responded to the Default cum Recall Notice by stating that the non-completion of the Project is on account of the non-
disbursement of funds by the other lenders and breaches committed by NHAI.
FC claims that the Corporate Debtor did not deny the commission of default under the Loan Agreement.
10.05.2023 Notice was issued by UBI on STPL for declaration of 'event of default' in terms of Clauses 9.1(c), 9.1
(d) (i) and 9.1 (u) of the Loan Agreement. Notice stated as follows:
(i) STPL has committed a 'Financial Default' in terms of the Substitution Agreement since it has defaulted in debt servicing for a continuous period of 3 months to one of the lenders i.e. IIFCL and has committed a material breach of the Loan Agreement which is a Financing Agreement under the Concession Agreement and the Substitution Agreement.
(ii) Accordingly, UBI in its capacity of Lender's Representative declared 'event of default' and issued this Notice exercising right of substitution of STPL with a 'Nominated Company'.
Note: Though the lenders had taken all the efforts, the Substitution process ultimately did not materialize.
20.06.2023 Corporate Debtor's response to the Financial Creditor's notice dated 10.05.2023 stating that Company Appeal (AT)(Insolvency) No. 44 of 2025 68 of 99 the project could not be completed because of the breaches committed by NHAI and the lenders.
10.10.2023 Pursuant to the Notice of Financial Default dated 10.05.2023, NHAI suspended the Concessionaire's rights under the Concession Agreement in terms of Clause 3.2.3 of the Substitution Agreement.
Note: Accordingly, the Concessionaire's rights were suspended for a period of 270 days i.e. till 06.07.2024.
29.10.2023 The account of the Corporate Debtor was declared as NPA by UBI due to the Corporate Debtor's failure to make the payment towards interest for a consecutive period of 3 months.
01.02.2024 UBI filed the Section 7 Petition before the Ld. NCLT for a default of INR 184,23,86,839.03 towards 'Principal' and INR 11,31,78,183.42 towards 'Interest'.
109. We may also note that the financial creditor had tried to argue the case of the CD while writing a recommendation letter on 17.09.2022 to NHAI that CD remained capable of completing the project to the NHAI granting extension of time and deferment of premium to the CD. But CD and NHAI were engaged in their bilateral disputes in which the FC-UBI was not a party.
110. Even then it is contested and the appellant has strongly argued that the loan agreement between the Financial Creditor-Union Bank of India and the CD-Respondent-STPL cannot be seen in isolation. Appellant contends that the transactions have to be seen in a consolidated manner wherein the concession agreement, the substitution agreement and the loan agreement have to be seen together in a consolidated manner. We note that the loan agreement is an agreement between Union Bank of India-FC and CD-STPL Company Appeal (AT)(Insolvency) No. 44 of 2025 69 of 99 and the CD has repayment obligations towards Union Bank of India. Since there was a default, Union Bank of India moved NCLT for initiation of Section 7 proceedings. We cannot find any legal infirmity in the action of Union Bank of India. Any disputes which the CD-STPL was having qua NHAI are irrelevant for the Section 7 proceedings before NCLT. We therefore reject the argument of the appellant that the loan agreement should not be seen in isolation and the transactions have to be seen in a consolidated manner. Appellant has raised a related argument that the "default is contrived" by the conduct of the respondents namely NHAI and financial creditors and it is a malicious and fraudulent initiation of CIR proceedings against the corporate debtor. It therefore claims that the adjudicating authority should have gone into the "causation of the default" and just not the "existence of default". The appellant claims that the default has been created by persistent default has occurred due to the conduct NHAI and also lenders. The judicial precedents are very clear in this regard. We note that the Adjudicating Authority is not entitled to examine the reason for commission of financial default under Section 7 of the Code, when the requirement of 'debt' and 'default' have clearly been established.
111. Respondent-UBI has also placed reliance upon the following judgments of Honourable Supreme Court of India and hereinafter we will examine their relevance in this case:
o Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407 o ES Krishnamurthy v. M/s Bharath Hi Tech Builders (2022) 3 SCC 161 Company Appeal (AT)(Insolvency) No. 44 of 2025 70 of 99 o Suresh Kumar Reddy vs. Canara Bank & Ors., 2023 8 SCC 387
112. Innoventive Industries Ltd (supra) affirms that once default is established, the adjudicating authority has limited discretion and must admit the petition. The Hon'ble Supreme Court in the Innoventive Judgment had held as follows:
"28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the Company Appeal (AT)(Insolvency) No. 44 of 2025 71 of 99 adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub- section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be."
[emphasis supplied]
113. Following the principle laid down in the Innoventive Judgment, the Hon'ble Supreme Court in the Krishnamurthy Judgment (supra) held as follows:
"31. On a bare reading of the provision, it is clear that both, clauses
(a) and (b) of sub-section (5) of Section 7, use the expression "it may, by order" while referring to the power of the adjudicating authority.
In clause (a) of sub-section (5), the adjudicating authority may, by order, admit the application or in clause (b) it may, by order, reject such an application. Thus, two courses of action are available to the adjudicating authority in a petition under Section 7. The adjudicating authority must either admit the application under clause (a) of sub-section (5) or it must reject the application under clause (b) of sub-section (5). The statute does not provide for the adjudicating authority to undertake any other action, but for the two choices available.
...
34. The adjudicating authority has clearly acted outside the terms of its jurisdiction under Section 7(5) IBC. The adjudicating authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the adjudicating authority must then either admit or reject an application, respectively. These are the only two courses of action which are open to the adjudicating authority in accordance with Section 7(5). Company Appeal (AT)(Insolvency) No. 44 of 2025 72 of 99 The adjudicating authority cannot compel a party to the proceedings before to settle a dispute...."
[emphasis supplied]
114. The Hon'ble Supreme Court in Suresh Kumar Reddy (supra) judgment has further held that the adjudicating authority has hardly any discretion to refuse admission once satisfied of default. It will be instructive to extract relevant portion as below:
"...
10. The view taken in Innoventive Industries has been followed by this Court in E.S. Krishnamurthy. Paras 32 to 34 of the said decision read thus : (E.S. Krishnamurthy case, SCC pp. 177-79) "32. In Innoventive Industries, paras 28 and 30, a two-Judge Bench of this Court has explained the ambit of Section 7 IBC, and held that the adjudicating authority only has to determine whether a "default"
has occurred i.e. whether the "debt" (which may still be disputed) was due and remained unpaid. If the adjudicating authority is of the opinion that a "default" has occurred, it has to admit the application unless it is incomplete. Speaking through Rohinton F. Nariman, J., the Court has observed: (SCC pp. 438-39, paras 28 & 30) '28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor -- it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the Company Appeal (AT)(Insolvency) No. 44 of 2025 73 of 99 corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be.
* * *
30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the Company Appeal (AT)(Insolvency) No. 44 of 2025 74 of 99 adjudicating authority that the adjudicating authority may reject an application and not otherwise.'
33. In the present case, the adjudicating authority noted that it had listed the petition for admission on diverse dates and had adjourned it, inter alia, to allow the parties to explore the possibility of a settlement. Evidently, no settlement was arrived at by all the original petitioners who had instituted the proceedings. The adjudicating authority noticed that joint consent terms dated 12-2-2020 had been filed before it. But it is common ground that these consent terms did not cover all the original petitioners who were before the adjudicating authority. The adjudicating authority was apprised of the fact that the claims of 140 investors had been fully settled by the respondent. The respondent also noted that of the claims of the original petitioners who have moved the adjudicating authority, only 13 have been settled while, according to it '40 are in the process of settlement and 39 are pending settlements'. Eventually, the adjudicating authority did not entertain the petition on the ground that the procedure under IBC is summary, and it cannot manage or decide upon each and every claim of the individual homebuyers. The adjudicating authority also held that since the process of settlement was progressing "in all seriousness", instead of examining all the individual claims, it would dispose of the petition by directing the respondent to settle all the remaining claims "seriously" within a definite time-frame. The petition was accordingly disposed of by directing the respondent to settle the remaining claims no later than within three months, and that if any of the remaining original petitioners were aggrieved by the settlement process, they would be at liberty to approach the adjudicating authority again in accordance with law. The adjudicating authority's decision was also upheld by the appellate authority, who supported its conclusions. Company Appeal (AT)(Insolvency) No. 44 of 2025 75 of 99
34. The adjudicating authority has clearly acted outside the terms of its jurisdiction under Section 7(5) IBC. The adjudicating authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the adjudicating authority must then either admit or reject an application, respectively. These are the only two courses of action which are open to the adjudicating authority in accordance with Section 7(5). The adjudicating authority cannot compel a party to the proceedings before it to settle a dispute."
(emphasis in original and supplied)
11. Thus, once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7. "Default" is defined under sub- section (12) of Section 3 IBC which reads thus:
"3. Definitions.--In this Code, unless the context otherwise requires--
* * * (12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not [paid] by the debtor or the corporate debtor, as the case may be;"
Thus, even the non-payment of a part of debt when it becomes due and payable will amount to default on the part of a corporate debtor. In such a case, an order of admission under Section 7 IBC must follow. If NCLT finds that there is a debt, but it has not become due and payable, the application under Section 7 can be rejected. Otherwise, there is no ground available to reject the application.
14. Thus, it was clarified by the order in review that the decision in Vidarbha Industries was in the setting of facts of the case before this Court. Hence, the decision in Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view Company Appeal (AT)(Insolvency) No. 44 of 2025 76 of 99 taken in Innoventive Industries and E.S. Krishnamurthy. The view taken in Innoventive Industries still holds good."
115. Thus, we find that in Suresh Reddy (supra) it was held that once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7. Even the non- payment of a part of debt when it becomes due and payable will amount to default on the part of a corporate debtor. In such a case, an order of admission under Section 7 IBC must follow. If NCLT finds that there is a debt, but it has not become due and payable the application under Section 7 can be rejected. Otherwise, there is no ground available to reject application. (Paras 9 to 11) It was clarified by the order in review that the decision in Vidarbha Industries, (2022) 8 SCC 352, was in setting of facts of the case before the Supreme Court in that case. Hence, the decision in Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in Innoventive Industries case and E.S. Krishnamurthy case. The view taken in Innoventive Industries case still holds good. (Para 14)
116. We note that a similar view is taken that Adjudicating Authority is not entitled to examine the reason for commission of financial default under Section 7 of the Code, when the requirement of 'debt' and 'default' have clearly been established in the Hon'ble Supreme Court's judgment dated 27.02.2023 in Abhijeet Integrated Steel Limited vs. IDBI Bank Limited, Civil Appeal No. 1257 of 2023 wherein the Hon'ble Supreme Court upheld this Appellate Tribunal's order in IDBI Bank Limited vs. Abhijeet Integrated Steel Company Appeal (AT)(Insolvency) No. 44 of 2025 77 of 99 Limited, 2023 SCC OnLine NCLAT 1182, whereby this Hon'ble Tribunal had, while relying on Swiss Ribbons, categorically observed that:
"24. Under the Scheme of IBC, when a Corporate Debtor is unable to pay its debt, which becomes payable, it is a warning signal for Corporate Debtor and when an Application is filed by a Financial Creditor to initiate CIRP under Section 7 and there are ample material that Corporate Debtor is unable to pay its debt and has committed default, the Adjudicating Authority is not required to go into the reasons of default and ignore the real status of the Corporate Debtor and close its eyes to the fact that the Corporate Debtor needs insolvency resolution. Red signal having been flagged by the Applicant, ignoring the precarious financial situation and status of the Corporate Debtor and not taking remedial action to bring back the Corporate Debtor on its track by adopting resolution process as per IBC and reject the Application on the reasons of default, is clearly contrary to the whole Scheme of the IBC".
[emphasis supplied]
117. Further, it is pertinent to look at the Supreme Court judgment of Swiss Ribbons v. Union of India, W.P. (Civil) No. 99 of 2018, which held that the objective of the code which is a beneficial legislation enacted for facilitating banks to move towards early resolution of problem assets as an effective legal framework for timely resolution of insolvency and bankruptcy which will support the development of credit markets, encourage entrepreneurship, improve ease of doing business and facilitate more investments leading to higher economic growth and development.
118. We thus find that not only the Code but the above judgments support the case of the financial creditor and thus the claim of the appellant that the Adjudicating Authority should have gone into the causation of default cannot Company Appeal (AT)(Insolvency) No. 44 of 2025 78 of 99 be accepted. The adjudicating authority cannot enter into the contractual context and so called "induced default", which falls outside the domain of the insolvency proceedings and needs to be settled between the Appellant and the NHAI at an appropriate forum. Adjudicating authority has to only verify existence of debt and default and not probe into disputes. We therefore do not find any infirmity at the level of adjudicating authority on this count.
119. And in this case we find that it is an admitted fact that STPL has defaulted on servicing its debt to lenders since 2019. The lenders had restructured the Common Loan Agreement (dated 03.08.2023, as amended) several times, extending the first repayment installment due date multiple times due to STPL's inability to make timely repayments. Under Clause 2.6 (Repayment) of the Loan Agreement, STPL was obligated to repay loans in 47 unequal quarterly installments, with the first installment due on 30.06.2016 and last due on 31.12.2027. Interest was payable monthly in arrears under Clause 3.1.1, Article III. Despite this, STPL defaulted in interest payments since 31.07.2019, and its loan account was classified as NPA on 29.10.2023 under RBI guidelines, triggering an Event of Default under Clause 9.1(a)(i). UBI recalled the facility by letter dated 04.02.2023 under Clause 9.2 Consequences of Events of Default, exercising its rights to accelerate payment obligations.
Concession agreement & Insolvency proceedings
120. From various judicial pronouncements we thus observe that the adjudicating authority is not entitled to examine the reasons for the financial default once debt and default are established. As a corollary, the Tribunal Company Appeal (AT)(Insolvency) No. 44 of 2025 79 of 99 need not also evaluate or adjudicate complex contractual disputes or arbitral claims raised by appellant at the stage of admission.
121. We further note that the Concession agreement for the construction of the road was between the Appellant-corporate debtor and NHAI and the financial creditor was not a party to this contract. The only tripartite agreement between the CD, NHAI and the FC was relating to substitution agreement by which financial creditor had a right to substitute the concessionaire in case conditions so arise, that corporate debtor has to replace with another concessionaire. Now this Substitution Agreement does not make the financial creditor liable to create have created a situation of contrived default. In fact, the substitution agreement is to ensure the interests of the lenders in case the corporate debtor does not perform. Appellant also claims that the CD-STPL should get termination benefits as per the Concession agreement, the amount which for exceeds the claim of the creditors and for that reason the appellant-CD-STPL should not be put into insolvency. The Corporate Debtor has contended that on account of expiry of suspension period, termination in terms of Clause 37.3 "Termination Payment" is attracted. Additionally, the Corporate Debtor had further contended that it has sent the Termination Notice dated July 18, 2024 wherein the Corporate Debtor has sought to terminate the Concession Agreement and has demanded a Termination Payment to the tune of INR. 1445.60 Crores from NHAI in terms of Article 37.3.2 of the Concession Agreement. We find that the rebuttal the arguments of the Union Bank of India to be convincing that a Financial creditor cannot await indefinitely for Company Appeal (AT)(Insolvency) No. 44 of 2025 80 of 99 arbitration award and termination payment as they are not a party on those proceedings and as that contract was between the corporate debtor and NHAI. It is their bilateral dispute and a financial creditor cannot wait indefinitely and has all rights to proceed for insolvency proceedings.
122. Another related argument has been made that after suspension and termination of the concession agreement, NHAI who was in control of the escrow account and sufficient funds were available which could have used for completion of the work and also service the debt. But NHAI did not service it and therefore the account of the CD became NPA. UBI brought to or notice that the money lying in the Escrow were not sufficient to repay the debts of the lenders. As on the date of the Suspension Letter (i.e. January 12, 2023) a sum of only INR 9,22,871.69 (Indian Rupees Nine Lakhs Twenty-Two Thousand Eight Hundred and Seventy-One Crores and Sixty-Nine paise) and was lying in the Escrow account.
123. Without looking into the exact amounts in the escrow account, we note that all these are contractual disputes between the Appellant and NHAI and we do not intend to delve into such issues. Sufficient to say that prima facie we find no truth in this argument as the over-dues and default qua Union Bank of India were continuing for a long time and for that reason only many amendments and novation agreements were signed between them. Default in repayment may be related to suspension and termination of the concession by National Highway Authority of India, but we don't have jurisdiction to deal with it and that will take us into exploring the causes of the default and which Company Appeal (AT)(Insolvency) No. 44 of 2025 81 of 99 we are not to enter into in the insolvency proceedings under section 7 of the Code. We find that these were disputes going on between the CD and NHAI, which are independent of insolvency proceedings between the financial creditor and the CD.
124. We are not here to adjudicate on contractual issues, yet we find the termination notice by STPL lacked compliance with the cure periods mandated under Clause 37.2 of the Concession Agreement and was not acknowledged by NHAI. Moreover, Termination payments claimed are contingent upon the terms and resolution of arbitration proceedings between STPL and NHAI, independent of insolvency proceedings. Most importantly, Termination did not extinguish STPL's liability to lenders nor bar insolvency proceedings under the IBC. Moreover, Section 7 proceedings cannot await the outcome of resolution of disputes between the CD and NHAI.
125. Appellant also contends that despite funds available in escrow, default was alleged due to NHAI and lenders' acts. The respondents refute this, showing that escrow funds were insufficient to meet the project completion and suspension-related costs. Contractual provisions under the Concession Agreement (Clause 36.2.1 and Clause 31.3) permit NHAI to apply funds towards critical project expenses during suspension, superseding debt payments. Further, the suspension and delay were caused by STPL's breaches, necessitating NHAI intervention and project takeover. The financial default predated NHAI's suspension, and STPL's failure to repay lenders is independent.
Company Appeal (AT)(Insolvency) No. 44 of 2025 82 of 99
126. Appellant has placed its reliance on Jetpur Somnath Tollways Limited vs. National Highway Authority of India (SB) 2017 SCC Online Del HC 9453, wherein while considering a case where the terms of the concession agreement regarding termination payments were identical, the Hon'ble Delhi High Court inter alia held that:
"64. This, to my mind, has been stipulated because, under clause 37.4 of the Concession Agreement, upon Termination for any reason whatsoever, NHAI is deemed to have taken possession and control of the Project Highway forthwith and NHAI upon its election succeeds to the interests of Jetpur under such of the project Agreements as NHAI may in its discretion deem appropriate.
65. The sequiter of the above stipulation is that NHAI which has no financial liability for the execution of the project would come into possession of the Project Highway, which would be at least 75% complete, and also succeed to all rights of JETPUR, including toll collection.
66. The stipulation in the Concession Agreement is that the Concessionaire would be entitled to obtain finance facility. The Concession Agreement gives a comfort to the lenders, that their debt is secured inasmuch as on termination for any reason whatsoever, they are assured that at least 90% of their debt outstanding would be deposited in the Escrow Account by NHAI."
127. The judgment was affirmed by the Hon'ble Division Bench of the High Court [National Highway Authority of India v. Punjab National Bank 2017 SCC Online Del 11312] in which it inter alia held that the intent and objective behind providing for Termination Payment was to protect the interest of the senior lenders who had financed the Project. From the judgments and extracts set out above, it is clear that the object behind providing for termination Company Appeal (AT)(Insolvency) No. 44 of 2025 83 of 99 payments is to secure the interests of the lenders. Relying on this judgment the Appellant has tried to link the termination payments that were the subject matter of dispute between the NHAI and the Corporate Debtor with the Financial Creditor. Appellant claims that the Hon'ble High Court while rejecting the NHAI's contention that it was not under any obligation to pay termination payments inter alia on account of recoveries from the SPV in question, held:
"83. Third adjustment has been made on account of alleged recoveries to be made by NHAI from Jetpur. This is also contrary to the stipulations contained in the Concession agreement with regard to Termination Payment.
84. The clause relating to Termination Payment does not contemplate any deduction being made there from. According to clauses 3.2 and 4.2 of the Escrow Agreement and clauses 31.2 and 31.4 of the concession agreement, NHAI is obliged to deposit the Termination Payment comprising of 90% of Debt Due into the Escrow Account. The lenders are entitled to appropriate the amount in priority to any claim of damages or recoveries that NHAI may have from Jetpur. The appropriation of Debt Due is only lower in priority to payment of taxes by Jetpur.
85. This stipulation, as noticed above, appears to be to protect the interest of the lenders, who are not concerned with the inter se disputes between NHAI and Jetpur. Clearly, NHAI has faulted in making deductions from the Termination Payment."
[emphasis supplied]
128. Appellant's case doesn't get any support from the above judgement as we are not discussing the rights of NHAI but the rights of FC-UBI which are in any case protected as per the loan agreement. The matter relating to Company Appeal (AT)(Insolvency) No. 44 of 2025 84 of 99 termination payments relate to CD qua NHAI. The Financial Creditor's cannot be limited by just termination payments, even though they appear to protect the interest of the lenders. FC cannot be bound to follow a particular course of action to protect their interest. If they follow the legal route of insolvency resolution of the CD through Section 7 proceedings, they cannot be forced by someone else to follow the route of recovery through termination payments - which may or may not materialize and in which case they are not a direct party. It cannot be, therefore, surmised that since FC did not pursue termination payments, considering that quantum for NHAI default would be INR 1393.62 crores and in the event of Corporate Debtor default would be INR 823.79 crores, which is much more than the amount in default due to the Financial Creditor, therefore the FC has pushed the Corporate Debtor into insolvency resolution.
129. We thus find that the disputes between the Corporate Debtor and NHAI under the Concession Agreement and certain lenders not disbursing their commitment are contractual disputes which have no bearing on the Corporate Debtor's obligations to the Respondent No. 1-UBI under the Loan Agreement between the Corporate Debtor and the Respondent No. 1. We find that the Respondent No. 1 had in its capacity as a lender, has not committed any breach of contract i.e. the Common Loan Agreement and had disbursed the loans according to the terms of the Common Loan Agreement. The existence of 'debt' and 'default' has been established in the present case.
130. Respondent Bank-UBI has also brought to our attention two other Company Appeal (AT)(Insolvency) No. 44 of 2025 85 of 99 judgements of this Appellate Tribunal noted hereinafter. In similar facts, in another recent judgment in Sandeep Jain vs. IDBI Trusteeship Services Ltd. & Anr. 2025 SCC OnLine NCLAT 286 (Paras 17 and 21) an argument made by the Appellant was rejected, that sufficient funds were available in the escrow account and the PMC having financial creditors nominees as members, were to be blamed for nonpayment to the financial creditors, wherein this Hon'ble Appellate Tribunal held as follows:
"....
17. The PMC was constituted for the purpose and object to monitor the project, to improve the sales and collections from the project and completing the construction of the project. PMC was constituted to improve the functioning of company qua the construction of the project. PMC in no manner has undertaken the obligation of the obligors towards repayment which is clearly reflected in Clauses 2.6 and 2.22 as extracted above. We, thus, do not find any substance in the submission of Shri Arun Kathpalia that after constitution of PMC in which there are three members of the financial creditors i.e. majority, blame for non-payment of due amount can be put on the financial creditor itself. The PMC was constituted to assist and improve the operations and construction of the project which in no manner diminish the obligation of the corporate debtor to fulfil its payment obligation. The default in repayment of the obligation by obligors cannot in any manner be put on the financial creditor nor constitution of PMC in any manner affect the obligation or absolve the corporate debtor from its default for repayment of the debt.
21. We do not find any infirmity in the findings returned by the Adjudicating Authority that the financial creditor succeeded in proving the debt and default and the ingredients under Section 7 are fulfilled. In view of the facts brought on the record, it is clearly proved that there is a debt and default which has been Company Appeal (AT)(Insolvency) No. 44 of 2025 86 of 99 acknowledged from time to time by the corporate debtor. Corporate debtor has failed to honour its repayment obligations as per financial document. Adjudicating Authority after considering all submissions of the parties have rightly returned the finding of debt and default."
[Emphasis Supplied]
131. Further, this Appellate Tribunal in Deepak Raheja and Another vs. Omkara Assets Reconstruction Pvt. Ltd. and Another, 2025 SCC OnLine NCLAT 1287 whereby an argument was made that the amount in the Retention Account was enough to repay the debt of the lenders was rejected, this Hon'ble Tribunal held as follows "....
21. The learned Counsel for the Appellant has also taken exception to the findings of the Adjudicating Authority that with regard to DSRA, the Adjudicating Authority has held that even though amount was to be adjusted from DSRA, the balance of Rs.3 crores in GSTAAD Hotels and only 26% on pro-rata basis would fall for satisfying the liabilities under ECLGS Facilities. The Adjudicating Authority in the impugned order has noted the relevant Clauses of the Agreement, which provide that amount has to be first utilized against penal interest and thereafter for interest and the principal. The said findings of the Adjudicating Authority were based on Clauses of the Loan Agreement, pro-rata distribution of the Company Appeal (AT) (Ins.) Nos.1039 & 1040 of 2025 32 amount lying in the account. It is on the record that amount of Rs.3 crores remained undisbursed in the DSRA. Due to non-
disbursement, there was no liability towards Rs.3 crores. The interest and disbursement of Rs.3 crores could also include interest liabilities. Hence, the findings of the Adjudicating Authority that even assuming the balance amount of Rs.3 Company Appeal (AT)(Insolvency) No. 44 of 2025 87 of 99 crores in DSRA is utilized, the default shall still continue, are the findings based on consideration of all relevant facts and cannot be faulted. The Adjudicating Authority, thus, has while passing the order dated 08.07.2025, in admitting CP(IB)Nos.290 and 291 of 2023 has considered all relevant facts, materials on record, the submissions of the parties and keeping in view of the remand order dated 08.01.2025, has admitted Section 7 applications finding debt and default on the part of the CDs.
27. In view of our foregoing discussions, we come to the conclusion that the Adjudicating Authority in the impugned order after considering all relevant facts on the record, including the Statement of Accounts and the Company Appeal (AT) (Ins.) Nos.1039 & 1040 of 2025 37 materials placed by both the parties, has returned finding that date of default is 15.11.2022 and has also upheld the loan recall notice dated 15.02.2023 and other circumstances, under which the CDs need resolution has also been considered by the Adjudicating Authority, as noted above. We, thus, do not find any ground to interfere with the order of the Adjudicating Authority dated 08.07.2025, admitting CP(IB) Nos.290 & 291 of 2023 in respect of Neo Capricorn and GSTAAD Hotels. In result, both the Appeals, i.e. Company Appeal (AT) (Ins.) No.1039 of 2025 and Company Appeal (AT) (Ins.) No.1040 of 2025 are dismissed. Parties shall bear their own costs."
[Emphasis supplied]
132. Respondent-UBI-FC is also supported by another judgement of this Tribunal in Vikram Bhawanishankar Sharma Member of the Suspended Board of Directors of Supreme Manor Wada Bhiwandi Infrastructure Pvt. Ltd., v. Union Bank of India & Anr., Comp App. (AT) (Ins) No. 794 of 2023, Company Appeal (AT)(Insolvency) No. 44 of 2025 88 of 99 whereby in a similar case, it was held that the arguments of the Appellant were rejected that the termination of the Concession Agreement by the Government of Maharashtra has resulted in shifting of liability upon the Government of Maharashtra, and it was held that the same cannot be made the basis for dismissing the application because the liability was enjoined upon the corporate debtor to make the payment to the financial creditor, which is noted hereinbelow:
"....
30. The argument of the Appellant that the termination of the CA (Concession Agreement) by the GoM (Government of Maharashtra), the same cannot be made the basis for dismissing the application because the liability was enjoined upon the CD to make the payment to the FC".
133. We also note that as per the Common Loan Agreement, the rights and obligations of the lenders are several and UBI's arguments are convincing that they are not liable for the obligations of the other lenders. UBI cites Clause 2.1B of the First Novation to the Loan Agreement states that:
"2.1B Nature of rights and obligations of the Rupee Lenders The obligations of each of the Rupee Lenders hereunder are several. No Rupee Lender shall be responsible for the obligations of any other Rupee Lender"
134. We therefore find that in such an arrangement, UBI cannot be held if other lenders fail to perform their obligations under the arrangement. Therefore, Respondent No. 1 cannot be held responsible for other lenders' failure to satisfy their obligations under the Common Loan Agreement.
135. We also find that the disputes regarding the suspension period or the relinquishment of the rights of the concessionaire under the Concession Company Appeal (AT)(Insolvency) No. 44 of 2025 89 of 99 Agreement and certain lenders not disbursing their commitment are contractual disputes which have no bearing on the Corporate Debtor's obligations to the Respondent No. 1-UBI under the Loan Agreement between them.
136. We thus find that the Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank (2018), Jetpur Somnath Tollways Ltd. v. NHAI (2017) and Suresh Kumar Reddy v. Canara Bank (2023) emphasize that "cause of default" or disputes unrelated to debt repayment are not examinable in admission proceedings.
137. The Appellant's contention that the Corporate Debtor is an SPV and post termination of the Concession Agreement, it is not a going concern as it does not have any assets except for litigation receivables and hence, no resolution will be achieved under the Code is also without any merits. Such an argument undermines the very object of the Code which is resolution and revival of the Corporate Debtor. Further, our attention is brought to multiple examples of resolution of toll projects SPVs under this Code such as CIRPs of Transstroy Tirupati-Tiruthani-Chennai Tollways Private Limited, Rajahmundry Godavari Bridge Limited, Lanco Hoskote Highway Limited, Sindhanur Gangavathi Tollway Private Limited, Transstroy Tirupati- Tiruthani-Chennai Tollways Private Limited, Patna Highways Limited, IVRCL Chengapalli Tollways Limited. In this regard, it was also brought to our notice that this Appellate Tribunal in the case of Vineet Khosla v. Edelweiss Asset Reconstruction Company Limited and Ors., 2019 SCC OnLine NCLAT Company Appeal (AT)(Insolvency) No. 44 of 2025 90 of 99 487 which was affirmed by the Hon'ble Supreme Court vide its order dated July 29, 2022 passed in Civil Appeal Nos. 4109-4110/2022 titled Vineet Khosla vs. M/S Edelweiss Asset Reconstruction Company Ltd and Ors. has categorically observed that the Adjudicating Authority while examining an application under Section 7 of the Code '...is not required to consider if or not resolution for a given Comраnу would be possible or not and whether or not it would be possible to keep it a going concern as the Corporate Debtor is trying to claim' (Para 16).
138. We also while exercising our power under the Code we are not courts of equity and must strictly adhere to the provisions of Code, as settled by Hon'ble Supreme Court in K Sashidhar v. India Overseas Bank (2019) 12 SCC 150, wherein it was held that:
"58. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code.
No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters "other than" enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers."
[Emphasis Supplied]
139. Therefore, we cannot go into issues unrelated to debt and existence of default and other issues of termination payments as per the concession Company Appeal (AT)(Insolvency) No. 44 of 2025 91 of 99 agreement and its impact and CD's resolution at this stage are not being seen by us.
140. Now we delve into the argument canvassed by the Appellant that reliance was placed by the NCLT on records of information utilities and balance sheets as unequivocal admissions of default which are contrary to the law laid down in the judgments cited below:
c. Swiss Ribbons Private Limited v. Union of India- 2019 4 SCC 17- Paragraph 87- Information utility records are only prima facie evidence of default which is rebuttable by the CD.
d. IL&FS Financial Services v. Adhunik Meghalaya Steel Private Limited 2025 SCC Online SC 1567- Paragraph 33-Entries in balance sheets have to be relied upon on a case to case basis - It would depend on the facts of each case whether an entry in the balance sheet qua any particular creditor is unequivocal or has been entered into with caveats.
And the Appellant contends that above also violate section 7(5) which necessarily envisages an analysis and satisfaction of the NCLT regarding the occurrence of a default. In this regard, Appellant places its reliance on judgement of the Hon'ble Supreme Court in Swiss Ribbons Private Limited v. Union of India (2019) 4 SCC 17 at para 87 wherein it was held that:
"....
57. The aforesaid Regulations also make it clear that apart from the stringent requirements as to registration of such utility, the moment information of default is received, such information has to be communicated to all parties and sureties to the debt. Apart from this, the utility is to expeditiously undertake the process of authentication 105 and verification of information, which will Company Appeal (AT)(Insolvency) No. 44 of 2025 92 of 99 include authentication and verification from the debtor who has defaulted. This being the case, coupled with the fact that such evidence, as has been conceded by the learned Attorney General, is only prima facie evidence of default, which is rebuttable by the corporate debtor, makes it clear that the challenge based on this ground must also fail."
[Emphasis Supplied]
141. Rebutting above arguments, we were informed by the Respondent Bank-UBI that 'the in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred' (Para 30 of Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407). However, this case has better evidence, as in this case we note that it is just not the information utility records, but many other records of STPL which are noted as below:
(i) The default has been acknowledged and identified in the Report of the Information Utility, National E-Governance Services Limited which has been authenticated by the corporate Debtor.
(ii) The Balance Sheet and Auditor's Report for Financial Year 2022-2023 of the Corporate Debtor evidenced existence of financial debt and default. The Auditor's Report further states 'the Company has defaulted in repayment of principal and interest to Financial institutions'.
(iii) Further, as per the financial statements, the finance cost of the CD for the FY 2022- 23 is INR 11,742,00,000 while the CD has incurred a loss of INR 14,720,00,000 thus making it evident that the Corporate Debtor is under grave financial distress.
(iv) Statement of the accounts of the Corporate Debtor evidencing late payment and non- payment of principal and interest amounts.
142. Therefore, the contention of the Appellant that the NCLT's reliance on the record of default as per the NeSL to establish default on part of the Company Appeal (AT)(Insolvency) No. 44 of 2025 93 of 99 Corporate Debtor is insufficient to justify the admission of the Corporate Debtor under CIRP, is baseless.
143. Furthermore, in another case it was settled that 'when the record of Information Utility shows debt in default, the Adjudicating Authority or Appellate Authority are not required to further examine the record maintained by the Information Utility, especially when the record is deemed authenticated and no dispute or refutation has been done by the corporate debtor earlier' (Vipul Himatlal Shah v. Teco Industries, 2022 SCC OnLine NCLAT 209).
"16. In the light of the detailed discussion as above, it is clear that in case the record of Information Utility shows that there is a debt which is in default, the Adjudicating Authority or the Appellate Authority are not required to further examine the record maintained by the Information Utility, moreso when the record of the Information Utility is deemed authenticated and no dispute or refutation of said record has been done by the corporate debtor earlier. We also note that in the judgment of Rushabh Civil Contractors Pvt. Ltd. vs. Centrio Lifespaces Ltd. (supra), which has been cited by the Learned Counsel for Appellant, the record that formed the basis for financial debt and default was found to be forged and fabricated, which is not the case in the present appeal. Therefore, this judgment does not come to the rescue of the Appellant."
144. We thus find that the contention of the Appellant that the NCLT's reliance on the record of default as per the NeSL to establish default on part of the Corporate Debtor is insufficient to justify the admission of the Corporate Debtor under CIRP, is baseless. Therefore, all such documentary proofs of default and cannot be wished away and above contentions of the Appellants are rejected. In the above backdrop, we don't find any infirmity in the Company Appeal (AT)(Insolvency) No. 44 of 2025 94 of 99 conclusions of the AA on bases the records of the information utility and the financial statements of the CD, when apart from these documents so much evidence is on record.
145. The Appellant's contention that its only asset will be the receivables subject to the arbitration petition filed by the Corporate Debtor against NHAI seeking termination payment has been dealt by the Adjudicating Authority in the below paras:
"53. We would refer to the judgment rendered by the Hon'ble NCLAT in Century Aluminium Company Ltd. v. Religare Finvest Ltd. reported in (2024) ibclaw.in 698 NCLAT, wherein the Hon'ble NCLAT relied on the judgment of Hon'ble Apex Court in Indus Biotech Pvt. Ltd. Vs. Kotak India Venture (Offshore) Fund, (Earlier known as Kotak India Venture Limited) & Ors. reported in (2021) 6 SCC 436, and held that:
"13. ....
14. From the law laid down by the Hon'ble Supreme Court, it is clear that if an Application under Section 8 of the Arbitration and Conciliation Act, 1996, is filed, the Adjudicating Authority is duty bound to proceed first to decide the Application under Section 7 by recording a satisfaction with regard to their being default or not. The fact that whether Arbitration Proceedings are pending on the date when Section 7 Application is filed or it is sought to be initiated subsequent to filing of Section 7 Application is immaterial. The remedy under Section 7 is a special remedy, keeping the object and purpose of the IBC Code. When it is brought in the notice of the Adjudicating Authority that a Corporate Debtor needs a resolution it having committed default in payment of debt, the Court is obliged to consider the Section 7 Application to find out as to whether there is a debt and default. The Insolvency Resolution of a Corporate Company Appeal (AT)(Insolvency) No. 44 of 2025 95 of 99 Debtor which needs Insolvency Resolution can await adjudication of Arbitration Proceedings nor the Application under Section 7 can be kept pending till the adjudication of Arbitration Proceeding is completed. Allowing the Application under Section 8 filed by the Corporate Debtor amounts to asking the Adjudicating Authority to wait till Arbitration Proceedings are decided which is not in accord with the scheme of the IBC and shall defeat the entire purpose and object of the IBC. Adjudicating Authority in the Impugned Order has rightly rejected Application under Section 8 filed by the Corporate Debtor for referring to the dispute between the parties to the Arbitrator.
54. In view of the ratio laid down in Century Aluminium (Supra) and in Indus Biotech Pvt. Ltd. (Supra), mere filing an application under Section 9 of the Arbitration and Conciliation Act, 1996, does not affect the admission under Section 7 of the I&B Code. We would also note that the Hon'ble Delhi High Court on 23.10.2024 passed an order in respect of the said application under Section 9 of the Arbitration and Conciliation Act, 1996, which appears to not impact the present proceedings under Section 7 of the I&B Code."
[emphasis supplied]
146. In light of the above, while noting that all the pre-requisites of the petition under Section 7 were satisfied in the present case, the Adjudicating Authority has rightly admitted the Section 7 Petition vide the Impugned Order. We thus find that the present case is a fit case for admission as there is a clear existence of 'debt' and 'default' The dispute sought to be relied upon by the Corporate Debtor is inter-se the Corporate Debtor and the NHAI and it would not have any impact on the Section 7 Petition filed by the Respondent No. 1 in exercise of its statutory right. Further assuming that the termination is given effect to, the quantum of the termination payment and when such Company Appeal (AT)(Insolvency) No. 44 of 2025 96 of 99 payment will be received by the corporate Debtor is a mere contingency which cannot come in way of admission of the present petition. Even assuming that certain amount is payable by the NHAI to the Corporate Debtor, the exact quantum of such amount cannot possibly be ascertained at this stage.
147. We also note that there is no basis of Appellant's contention that the present case is a case of malicious initiation of CIRP by the Respondent No. 1 is malafide and without any merit. 'Fraud' and 'malicious intent' are the essential ingredients for invoking Section 651 of the Code which are missing in this case, without an iota of proof. We reject such arguments qua the FC- UBI and NHAI.
148. In the above backdrop, we find that the Adjudicating Authority has correctly observed in Para 45 as follows:
"45.....the position of law is settled that the moment a debt becomes due and payable, the Adjudicating Authority is satisfied that the default has occurred, a petition under Section 7 of the Code must be admitted. The Adjudicating Authority is not empowered to probe into the dispute between the parties. We would refer to the judgment rendered by the Hon'ble Apex Court in E.S. 1 Section 65: Fraudulent or malicious initiation of proceedings.
65. (1) If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
(2) If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees.
(3) If any person initiates the pre-packaged insolvency resolution process--
(a) fraudulently or with malicious intent for any purpose other than for the resolution of insolvency; or
(b) with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
Company Appeal (AT)(Insolvency) No. 44 of 2025 97 of 99 Krishnamurthy v. Bharath HiTecch Builders (P) Ltd., reported in (2022) 3 SCС 161: 2021 SCC OnLine SC 1242."
[emphasis supplied]
149. We thus find that the issues relevant in a petition under Section 7 of the IBC are only debt and default. The appellant's argument that the cause of default is alleged non-payment by NHAI is irrelevant, as the concept of "cause of default" is not a consideration in IBC proceedings. All disputes between NHAI and STPL, including contract performance and payments, are pending in arbitration and do not affect the validity of the insolvency petition. Section 7 proceedings are summary and cannot be stayed pending arbitration. We are not courts of equity but must strictly follow the IBC provisions. The appeal is filed with mala fide intention to derail CIRP lacks merit. We find that these are Corporate Debtor's attempt to interject arbitration proceedings to delay insolvency and thus are not legally tenable.
Conclusion:
150. The existence of debt and default on STPL's part stand established with ample documentary and financial records. The allegation of a contrived default due to UBI-FC's actions is unsupported; escrow fund usage and project suspension were within contractual rights of NHAI unrelated to insolvency proceedings. Termination of the concession agreement- being unilateral and to be decided by the Arbitrator as and when appointed- is irrelevant to the existence of default under the loan agreement warranting insolvency proceedings. The adjudicating authority, therefore, rightly admitted the insolvency petition under Section 7, adhering to the mandate of the IBC and binding judicial precedents. Moreover, RP is ensuring that CD Company Appeal (AT)(Insolvency) No. 44 of 2025 98 of 99 continues as a going concern and therefore the concession agreement- the main asset of the CD- continues and it survives and in case it is resolved then new PRA will take over as the new management. Further, as noted herein earlier, such cases have been resolved in the past, we find that in the facts and the circumstances of the case, the claims of the appellant that nothing is left to be resolved is baseless.
Order
151. We don't find any infirmity in the orders of the Adjudicating Authority.
We hereby affirm the continuation of the Corporate Insolvency Resolution Process against Solapur Tollways Projects Limited. Appeal is dismissed. RP may undertake further necessary steps for CIR proceedings. All related IAs, if any, are also disposed of. No orders as to costs.
[Justice N Seshasayee] Member (Judicial) [Arun Baroka] Member (Technical) [Indevar Pandey] Member (Technical) New Delhi.
November 20, 2025.
pawan Company Appeal (AT)(Insolvency) No. 44 of 2025 99 of 99