NCLT admits twin insolvency pleas by NARCL against Era Infra Group cos

The National Company Law Tribunal (NCLT) in New Delhi has simultaneously admitted two separate insolvency pleas against its subsidiary companies over combined defaults of nearly ₹2,772 crore. The tribunal initiated proceedings against Haridwar Highways Project Limited (HHPL) for a default of ₹2,386.51 crore and against Era Infrastructure (India) Ltd. for a default of ₹385.38 crore. The petitions were filed by the National Asset Reconstruction Company Limited (NARCL), India’s ‘bad bank’, which had acquired the massive outstanding loans from a consortium of lenders.

The bench, comprising Judicial Member Shri Manni Sankariah Shanmuga Sundaram and Technical Member Shri Atul Chaturvedi, dismissed last-ditch efforts by the group’s parent company, Era Infra Engineering Limited (EIEL)—which is itself undergoing insolvency—to intervene and block the proceedings.

A highway project gone sour

The cases stem from a stalled highway project. In 2010, HHPL, a Special Purpose Vehicle (SPV) created by EIEL, entered into a concession agreement with the National Highways Authority of India (NHAI) to four-lane the Muzaffarnagar-Haridwar section of NH-58.

To finance the project, a consortium of banks including Axis Bank, Bank of India (BOI), and Punjab National Bank, sanctioned a series of loans — Term Loan I (₹690.60 cr), Term Loan II (₹290.48 cr), and Term Loan III (₹51.26 cr). Era Infrastructure (India) Ltd. acted as a corporate guarantor for the BOI’s portion of the debt, which totalled ₹149.48 crore.

The project faced severe delays and cost overruns. The lenders alleged fund diversion and mismanagement, leading to the borrower’s account being classified as a Non-Performing Asset (NPA) from February 24, 2017. Despite recall notices, the debts remained unpaid, prompting NARCL, after acquiring the debt, to initiate insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code (IBC).

Tribunal’s key findings

The Corporate Debtors and the intervening parent company, EIEL, raised multiple objections, which the NCLT overruled:

1. Date of default clarified: The tribunal held that the “date of default” for initiating insolvency is not rigidly fixed as the NPA classification date. For HHPL, the default was acknowledged from the NPA date of February 24, 2017. For Era Infrastructure, the default was triggered on April 3, 2019, when BOI invoked the corporate guarantee. The bench relied on Supreme Court precedents to affirm this flexibility.
2. Claims within limitation: The NCLT rejected arguments that the applications were time-barred. It pointed to the borrowers’ repeated acknowledgments of the debt, including balance sheets from 2019-2022 and a specific letter dated September 23, 2021. These acknowledgments, under Section 18 of the Limitation Act, created a fresh limitation period, bringing the petitions well within the three-year window.
3. Parent company’s plea dismissed: EIEL argued that the assets and arbitral proceeds of HHPL and Era Infrastructure were already factored into its own approved resolution plan. It claimed NARCL, having consented to this plan, could not now pursue the SPVs separately.

The tribunal flatly rejected this, stating that EIEL’s resolution plan explicitly did not deal with third-party collateral or the debts of its SPVs. It called the intervention applications “frivolous and dilatory tactics” intended to “derail and frustrate the ongoing insolvency resolution process.”

Simultaneous insolvency initiated

Following its findings, the NCLT passed two separate orders:

• C.P. No. (IB) 777 of 2024: Initiated the Corporate Insolvency Resolution Process (CIRP) against Haridwar Highways Project Limited for a default of ₹2,386.51 crore (Principal: ₹1,021.39 cr; Interest: ₹1,365.11 cr).
• C.P. No. (IB) 172 of 2025: Initiated the CIRP against Era Infrastructure (India) Ltd. for a default of ₹385.38 crore (Principal: ₹143.75 cr; Interest: ₹241.62 cr) under its corporate guarantee.

Alok Kumar Agarwal has been appointed as the Interim Resolution Professional (IRP) for both companies. The tribunal also declared a moratorium for both entities, prohibiting any legal actions, transfers of assets, or recovery proceedings against them.

The twin orders underscore the principle that corporate guarantors cannot escape liability and that the IBC allows for simultaneous proceedings against a principal borrower and its guarantors, ensuring financial creditors can pursue all available avenues for recovery.

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