NCLT Admits CIRP Against Vatika Ltd Over ₹274 Crore NCD Default on 'Aspirations' Project

NCLT Admits Vatika Ltd to Insolvency Proceedings

The NCLT stepped in in early February 2026, officially kicking off the resolution process. Upon failure to pay, a Section 7 application was filed before the NCLT Chandigarh claiming default of ₹274 crore, including the principal amount. The NCLT admitted the application and initiated CIRP against the corporate debtor as a whole.

The Financing Structure and Default Timeline

On 30 June 2017, it entered into a Debenture Trust Deed with IDBI Trusteeship Limited and subsequently raised ₹146 crore through non-convertible debentures. The debentures were specifically secured against the land and receivables of the "Aspirations" project in Sector 88B, Gurgaon.

The redemption date was later extended to 30 June 2024. However, the company defaulted in payment of quarterly coupon interest. On 29 December 2023, the debenture trustee issued a demand notice for ₹29.72 crore towards unpaid interest. Upon failure to pay, a Section 7 application was filed before the NCLT Chandigarh claiming default of ₹274 crore, including the principal amount.

The ₹274 crore total comprises multiple components: The principal amount reportedly stands at ₹146 crore, with an additional ₹29.3 crore in interest. Default interest is said to account for ₹43.3 crore, while the fixed redemption premium adds another ₹55.4 crore to the total outstanding figure.

Security Backing and Collateral

The lenders argued that the NCDs were secured by an extensive security structure comprising an equitable mortgage created through a memorandum of deposit of title deeds over approximately 6.64 acres of land owned by Aplin Developers Pvt Ltd and approximately 5.575 acres owned by Malvina Developers Pvt Ltd at Village Harsaru, Gurgaon.

Vatika's Defence and Redemption Extension Arguments

Vatika contested the admission, raising procedural and contractual objections. The initial contractual tenure of the NCDs under Schedule IX to the Trust Deed was 48 months from the investment date, with the redemption date originally falling due on 30.06.2021. However, at the repeated requests of the Corporate Debtor, the parties executed an Amendment Deed dated 28.06.2021 extending the redemption date to 30.06.2022. Thereafter, the Corporate Debtor issued further request letters dated 24.06.2022 and 26.06.2023, and corresponding Extension Letters dated 26.06.2022 and 27.06.2023 were issued by the Debenture Trustee, finally extending redemption up to 30.06.2024.

Project-Specific Resolution and Appellate Clarity

In a significant development, the NCLAT modified the NCLT order, allowing CIRP to proceed but confined it to the "Aspirations" project in Sector 88B, Gurgaon. The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that once a debenture trustee successfully establishes the existence of financial debt and default, initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 cannot be faulted. However, the Tribunal clarified that where financing is project-specific in a real estate context, the CIRP must be confined to the concerned project and cannot extend to unrelated projects of the corporate debtor.

The NCLAT modified the NCLT Chandigarh's admission order and directed that CIRP shall continue only with respect to the "Aspirations" project in Sector 88B, Gurgaon. The insolvency proceedings were expressly restricted from extending to the other projects of Vatika Limited.

Vatika Group's Broader Portfolio

Vatika Group was founded in 1986 and has since evolved into a diversified real estate organisation with a presence across Delhi NCR, Rajasthan, Punjab, and other parts of North India. With over 15 completed projects in Gurgaon and more than 10,000 residential units handed over, the company has successfully combined aesthetics, functionality, and community-driven amenities, offering residents and investors a superior urban living experience.

Vatika Limited is engaged in the development of multiple residential and commercial projects across Haryana and the NCR region. The group operates spacious luxury floors in Sectors 88A, 88B, 82A & 83, Gurgaon. Vatika Group is the leading real estate developer in India offering residential apartments in gurgaon, commercial property ambala and many other cities in India.

Financial Context and Market Conditions

Vatika Ltd reported revenues of ₹1,080 crore in FY24 with a 22% CAGR. In January 2025, its long-term bank facilities were continued under an 'ISSUER NOT COOPERATING' category with a 'Negative' outlook by Infomerics due to a lack of financial information, suggesting opacity or potential distress.

This development occurs against a backdrop of significant turbulence in the Indian real estate sector, which grapples with a surge in insolvency cases, stalled projects, and developer defaults. Approximately 450 real estate companies and projects are reportedly confronting insolvency procedures due to defaults on project delivery or bank loans.

Statutory Framework and Next Steps

The Chandigarh bench of the NCLT is said to have ordered the initiation of insolvency proceedings against Vatika and appointed Jayant Prakash as the interim resolution professional (IRP) to oversee the process going forward. The appointment of an IRP initiates the corporate insolvency resolution process, under which a plan for revival or asset liquidation is developed within 180 days, extendable by a further 90 days under the Insolvency and Bankruptcy Code, 2016.