Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 27 October 2026

Case Overview

  • Parties: Appellants – ECL Finance Ltd (debenture holder & lender) and IDBI Trusteeship Services Ltd (debenture trustee); Respondents – Abhinav Mukherjee et al., representing homebuyers; Corporate debtor – Palm Developers Private Ltd (CD); underlying borrower – Saha Infratech Private Ltd (SIPL).
  • Underlying agreements: Debenture Trust Deed dated 13 May 2016, Facility Agreement dated 22 Sep 2017, Sanction Letter, Articles of Association of Palm Developers, and related security documents including first charge, mortgage, hypothecation and escrow arrangements for Project Encore.
  • Claims: ITSL claimed Rs 13,117,23,044 (as of 29 Feb 2020) as debenture trustee; ECL claimed Rs 139,02,83,168.68 under the term‑loan facility.
  • Procedural history: CIRP of the CD commenced on 27 Jan 2020; NCLT excluded the appellants as related parties under IBC Sec 5(24) and denied their inclusion in the Committee of Creditors (CoC); NCLAT affirmed the NCLT order; Civil Appeal Nos 6268/2022 and 6273/2022, together with Contempt Petitions C‑730/2023 and C‑731/2023, were filed before the Supreme Court.
  • Legal issues: (i) Whether a guarantee or lender‑debenture holder that possesses rights to appoint nominee directors, approve quarterly construction budgets, and control policy decisions constitutes a “related party” under Sec 5(24)(m)(i) of the Insolvency and Bankruptcy Code (IBC); (ii) Whether such a party can be treated as a financial creditor eligible to sit in the CoC under Sec 21(2) first proviso; (iii) Effect of a recent assignment of ECL’s rights to the second appellant on the related‑party analysis; (iv) Interpretation of Sec 5(8), Sec 5(7), Sec 3(12) and relevant case law – Anuj Jain (Interim RP), China Development Bank v. Doha Bank, Phoenix ARC v. Spade Financial Services, Aashray Social Welfare Society v. Saha Infratech, Arcelor Mittal India v. Satish Kumar Gupta, Subhkam Ventures (I) v. SEBI, and the Insolvency Law Committee Report 2020.

Final Outcome

  • The Supreme Court held that the NCLAT’s findings were correct; ECL Finance Ltd and IDBI Trusteeship Services Ltd are “related parties” of the corporate debtor and therefore barred from representation, participation, or voting in the Committee of Creditors.
  • The Court also concluded that the recent assignment of ECL’s rights to the second appellant was not a bona‑fide transfer but a manoeuvre to defeat the proviso of Sec 21(2); consequently, the assignee is likewise excluded.
  • All appeals were dismissed, the contempt petitions were closed, and any pending applications were rejected.

Topics: Insolvency & Bankruptcy, Related Party Exclusion, Committee of Creditors