NCLT Orders Insolvency Process Against Essel Infraprojects Over Rs 87.43 Crore Default
The National Company Law Tribunal Mumbai Bench has ordered the initiation of a Corporate Insolvency Resolution Process against Essel Infraprojects Limited over an unpaid loan default of Rs 87.43 crore, involving 196.16 acres of mortgaged land located at Gorai in Borivali.
The order, passed on August 24, 2026, came on a petition filed by Jammu and Kashmir Bank Limited under Section 7 of the Insolvency and Bankruptcy Code. The bank sought recovery of Rs 87,43,17,925.37, which includes outstanding principal, interest, and legal charges stemming from an underlying default dating back to October 2019.
The dispute originates from a Rs 200-crore line of credit facility sanctioned by Jammu and Kashmir Bank to Pan India Utilities Distribution Company Limited in December 2013. The bank disbursed Rs 125 crore on December 28, 2013, and the remaining Rs 75 crore on December 30, 2013. As security for the credit facility, Essel Infraprojects furnished a corporate guarantee dated December 27, 2013, and mortgaged 196.16 acres of land at Gorai, Borivali.
After the borrower, PIUDCL, faced liquidity issues and was admitted into insolvency resolution in September 2019, the bank invoked the corporate guarantee against Essel Infraprojects. Essel Infraprojects opposed the petition, arguing that it had ceased to own the Gorai land following high court-sanctioned demerger and merger schemes in 2014, which transferred the land to Pan India Infraprojects Private Limited. The company contended that PIIPL had executed fresh guarantee and mortgage documents, thereby discharging Essel Infraprojects from its liability.
The NCLT rejected these contentions, observing that the original corporate guarantee was irrevocable, unconditional, and continuing until the debt was fully liquidated. The tribunal held that the subsequent sanction was merely a continuation of the earlier loan arrangement and that no document had been placed on record showing that the bank had discharged Essel Infraprojects.
The tribunal also affirmed that under Section 128 of the Contract Act, a creditor can proceed simultaneously against a principal borrower and multiple guarantors, ruling that obtaining an additional mortgage from a new entity did not release Essel Infraprojects from its independent guarantee obligations.
