NCLAT Dismisses Suspended Director's Challenge to CIRP Admission of Bliss Abode and Bliss House
NCLAT upholds CIRP admission against two Rana Kapoor-linked real estate companies, ruling the loan recall notice of 9 March 2020 validly triggered default under the IBC.
The NCLAT Principal Bench, New Delhi, on 29 May 2026 dismissed two appeals filed by Bindu Kapoor, suspended director of Bliss Abode Private Limited and Bliss House Private Limited, challenging the admission of Corporate Insolvency Resolution Process proceedings against both companies. The adjudicating authority — the National Company Law Tribunal, New Delhi Bench, Court II — had admitted Section 7 applications filed by JC Flowers Asset Reconstruction Private Limited, the assignee of the original lender Indiabulls Housing Finance Limited, by orders dated 15 December 2025 and 21 January 2026 respectively. The appellate bench, presided over by Justice Ashok Bhushan, found that debt and default were clearly established from the loan recall notice of 9 March 2020, and that neither the pendency of a Section 34 challenge to the arbitral award nor the timing of the recall notice provided any ground to interfere.
The Loans, the Guarantees, and the Recall
Bliss Abode Private Limited entered into a loan agreement dated 13 July 2017 with Indiabulls Housing Finance Limited for Rs. 90 crore. Four further loan agreements dated 5 October 2017 were executed for Rs. 75 crore, Rs. 67 crore, Rs. 60 crore, and Rs. 83 crore respectively. Personal guarantees were executed by Bindu Kapoor and her husband Rana Kapoor. A Deed of Hypothecation was executed on 8 August 2019, and a Memorandum of Entry dated 23 August 2019 recorded the deposit of the title deed of the property at 40, Amrita Shergill Marg, New Delhi with IDBI Trusteeship Services Limited as security trustee.
Bliss House Private Limited had a separate loan agreement with Indiabulls Housing Finance Limited, with a further agreement dated 29 March 2019 for Rs. 105 crore. A common deed of guarantee was again executed by Bindu Kapoor and Rana Kapoor, and a mortgage deed was executed over a duplex apartment at a project named Sesen, owned by a related party, Imagine Residence Private Limited.
On 9 March 2020 — one day after Rana Kapoor's arrest by the Directorate of Enforcement — Indiabulls Housing Finance Limited issued loan recall notices to both corporate debtors. The notice to Bliss Abode demanded repayment of Rs. 388,42,96,875/- within five days. The notice to Bliss House demanded Rs. 189,27,34,375/-. No payments were made in response to either notice.
Arbitration proceedings were initiated. A sole arbitrator delivered an award dated 28 February 2023 in favour of the lenders against Bliss Abode for Rs. 453,75,24,066/- along with interest. A separate arbitration concerning Bliss House also concluded on 28 February 2023. The corporate debtors filed applications under Section 34 of the Arbitration & Conciliation Act, 1996 before the Delhi High Court, which remained pending without any interim order. On 29 March 2025, Indiabulls Housing Finance Limited assigned its rights to JC Flowers Asset Reconstruction Private Limited. Section 7 applications were filed by JC Flowers in July and October 2025 respectively, and both were admitted by the NCLT.
The Appellant's Case: No Default, Tainted Recall, Uncrystallised Award
Senior Advocate Mr. Krishnendu Datta, appearing for Bindu Kapoor in both appeals, pressed three principal arguments. First, there was no default by the corporate debtors at the time of the recall notice: interest payments were being made and the principal was not yet due. The recall notice was issued within hours of Rana Kapoor's arrest on 8 March 2020 and was therefore unreasonable. The liability of personal guarantors, he argued, arises only when the principal borrower fails to repay.
Second, the arbitral award dated 28 February 2023 was under challenge before the Delhi High Court under Section 34 and had not attained finality. Relying on Regulation 2A(b) of the CIRP Regulations, 2016, the appellant contended that an order of a court or tribunal can be relied upon only after the period of appeal has expired. A Section 7 application founded on an uncrystallised award was therefore not maintainable.
Third, the financial creditor had already filed an execution petition under Section 36 of the Arbitration & Conciliation Act, 1996 before the Delhi High Court. Filing a Section 7 application was, in effect, an attempt to use the IBC as an execution mechanism, which the appellant argued was impermissible. The appellant also raised a limitation objection in respect of the application concerning Bliss Abode.
The Financial Creditor's Response
Senior Advocate Mr. Abhijeet Sinha, appearing for JC Flowers, submitted that the recall notice of 9 March 2020 was issued strictly in accordance with the contractual terms. Clause 12.1.8 of the loan agreement defined a “Material Adverse Effect” as any event which, in the opinion of the lender, was likely to prejudicially affect the ability of the obligors to perform their obligations. Rana Kapoor, a personal guarantor and promoter of Yes Bank, was arrested on 8 March 2020 in connection with money laundering allegations. Criminal investigations had commenced. The lender's formation of the opinion that a material adverse effect had occurred was, he submitted, entirely within the contractual framework.
On the question of the arbitral award, the financial creditor's position was that the Section 7 application was not founded solely on the award. The primary default was the failure to pay in response to the loan recall notice by 14 March 2020. That default had continued for over six years without a single rupee being paid. The pendency of a Section 34 challenge did not prohibit a Section 7 application, which is an independent statutory remedy. The execution petition before the Delhi High Court similarly did not bar the IBC route. On limitation, the arbitral award of 28 February 2023 gave a fresh cause of action, and the Section 7 application was filed within three years of that date.
How the Tribunal Reasoned
The bench examined Clause 12.1.8 of the loan agreement and the definition of “Material Adverse Effect” and “Obligors” in the agreement. Guarantors were expressly included within the definition of obligors. The arrest of Rana Kapoor, a personal guarantor and promoter, in the context of criminal investigations into money laundering, fell squarely within the lender's contractual right to form an opinion that a material adverse effect had occurred. The bench held that no infirmity was found in the issuance of the loan recall notice dated 9 March 2020.
On the arbitral award argument, the bench examined Part IV of the Section 7 application filed against Bliss Abode. The pleadings showed that the primary default relied upon was the failure to pay in response to the loan recall notice by 14 March 2020, not the arbitral award alone. The award was referred to as a subsequent event that crystallised the quantum and gave a fresh limitation period. Regulation 2A(b) of the CIRP Regulations was therefore not applicable to defeat the application, since the application was not founded solely on the award.
The bench also addressed the appellant's reliance on this tribunal's earlier judgment in Shaikh Mohammed Tariq v. Aegis Forging Ltd., which had relied on the Supreme Court's decision in Vidarbha Industries Power Ltd. v. Axis Bank Limited to hold that admission of a Section 7 application is not obligatory merely on proof of debt and default. The bench noted that the Supreme Court had subsequently clarified and explained Vidarbha Industries in later decisions. It referred to Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan & Ors., reported in [2026 SCC OnLine SC 248], where the Supreme Court reiterated that the adjudicating authority under Section 7(5) is empowered only to verify whether a default has occurred, and must then either admit or reject the application. The scope of enquiry is restricted to the existence of debt and default, and nothing more.
The bench further referred to Elegna Co-op. Housing & Commercial Society Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. & Anr., reported in [2026 SCC OnLine SC 82], where the Supreme Court again held that once debt and default are established under Section 7, admission must follow.
On limitation, the bench applied the principles in Dena Bank v. C. Shivakumar Reddy & Anr. [(2021) 10 SCC 330] and Kotak Mahindra Bank Ltd. v. A. Balakrishnan & Anr. [(2022) 9 SCC 186], holding that an arbitral award gives a fresh cause of action and a fresh period of limitation. The Section 7 application against Bliss Abode, filed within three years of the award dated 28 February 2023, was within time.
The bench also rejected the argument that parallel proceedings before the Delhi High Court — whether the Section 34 challenge or the execution petition — barred the Section 7 route. It noted that the IBC provides an independent remedy, and the pendency of other proceedings does not foreclose it.
Outcome
Both appeals — Comp. App. (AT) (Ins.) No. 2040 of 2025 and Comp. App. (AT) (Ins.) No. 585 of 2026 — were dismissed. The bench found that the adjudicating authority had rightly concluded that the financial creditor proved debt and default, that the corporate debtors had made no payments for over six years since the loan recall notice of 9 March 2020, and that the corporate debtors required resolution under the IBC. Parties were directed to bear their own costs.