Project-Wise Resolution Prioritized for Real Estate Insolvency: NCLAT

NCLAT ruled that insolvency proceedings against real estate firms should be confined to specific projects rather than the entire company. 

Modifying an order against Vatika Limited, the Bench held that "project-wise" resolution is essential to protect unrelated stakeholders & homebuyers. 

The dispute arose after Vatika defaulted on interest payments for debentures linked specifically to "Project Aspirations" in Gurgaon. The NCLAT noted that the NCLT erred by ignoring binding precedents that allow for localized insolvency.

While the default was confirmed, the process will now be restricted to the single project funded by the specific debentures to avoid collateral damage to the company’s other solvent developments.

[Surender Singh v. IDBI Trusteeship Services Ltd.]