The National Company Law Tribunal (NCLT) has admitted an insolvency petition filed by Kotak Mahindra Bank against Mumbai-based Unity Realty and Developers over a claimed default of ₹68.49 crore. The order paves the way for the initiation of the corporate insolvency resolution process (CIRP) against the real estate company.
The Mumbai bench of the NCLT admitted the petition filed under Section 7 of the Insolvency and Bankruptcy Code (IBC). Kotak Mahindra Bank had filed the application on February 25, while the tribunal pronounced its order on September 22.
The financial creditor claimed that the default amount stood at ₹68.49 crore as of August 31, 2025, with September 23, 2023, stated as the date of default. Unity Realty and Developers had provided a corporate guarantee for financial facilities availed by Unity Infraprojects. The account of Unity Infraprojects had been classified as a non-performing asset on June 30, 2015.
Dispute Traces Back To 2008
The financial dispute relates to facilities that were originally sanctioned by ING Vysya Bank in 2008. Following financial difficulties faced by Unity Infraprojects, a corporate debt restructuring package was approved in 2014.
Under the restructuring arrangement, facilities aggregating to ₹31.78 crore were sanctioned in February 2015. Unity Realty and Developers subsequently executed a corporate guarantee in relation to these financial facilities.
The guarantee was invoked by the bank in October 2019 after difficulties faced by the principal borrower. The matter subsequently proceeded before the Debt Recovery Tribunal (DRT) in Delhi.
The DRT directed the defendants, including Unity Realty and Developers, to jointly and severally pay ₹39.45 crore along with interest at 11% per annum. A recovery certificate issued in August 2023 quantified the liability at ₹55.94 crore, excluding further interest and costs.
Unity Realty Opposed Insolvency Petition
Unity Realty and Developers had opposed the insolvency petition on several grounds. One of the company’s arguments was that the petition was barred by limitation because the corporate guarantee had been invoked in 2019.
The company also questioned Kotak Mahindra Bank’s right to initiate insolvency proceedings independently of the security trustee. It further raised objections relating to the restructuring documents and the release of the financial facilities.
The NCLT rejected these objections while considering the earlier proceedings before the DRT. The tribunal noted that the DRT judgment and the recovery certificate had not been challenged, stayed, modified or set aside.
Based on this, the tribunal held that the DRT judgment and recovery certificate provided a fresh cause of action. It consequently found that the insolvency application filed in February 2026 was within the applicable limitation period.
NCLT Finds Financial Debt And Default Established
The tribunal also examined whether Unity Realty and Developers could be proceeded against as a corporate guarantor under Section 7 of the IBC.
The NCLT held that the liability of Unity Realty and Developers as a corporate guarantor could be proceeded against under the insolvency framework. It further found that Kotak Mahindra Bank had established the existence of financial debt and default and that the insolvency application met the requirements prescribed under the IBC.
The admission of the petition allows the CIRP against Unity Realty and Developers to move forward. The case relates to the liability of a corporate guarantor for financial facilities extended to a principal borrower and the subsequent recovery proceedings concerning those facilities.
The matter also reflects the relationship between recovery proceedings before the DRT and insolvency proceedings under the IBC. In this case, the NCLT considered the existing DRT judgment and recovery certificate while examining the limitation objection raised by Unity Realty and Developers.
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