Supreme Court: Appeals dismissed, NCLAT order affirmed, ECL Finance barred from CoC

The Supreme Court, by a two‑judge bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran, dismissed the appeals filed by ECL Finance Ltd. and affirmed the National Company Law Appellate Tribunal’s order that excluded ECL from the Committee of Creditors (CoC) in the corporate insolvency resolution process of Palm Developers Pvt. Ltd. The Court also closed the pending contempt petitions.

ECL Finance Ltd. held all debentures issued by SIPL and was the lender under a term‑loan facility to Palm Developers. It sought to be treated as a financial creditor in the insolvency proceedings. The NCLT and subsequently the NCLAT held that ECL qualified as a ‘related party’ under Section 5(24)(m)(i) of the Insolvency and Bankruptcy Code, thereby disqualifying it from CoC representation, participation or voting under Section 21(2). The appeal challenged this classification.

The Court examined the Debenture Trust Deed, the Facility Agreement and the debtor’s articles of association and observed that ECL’s rights included appointing nominee directors, approving annual budgets and supervising management, which amounted to active participation in the debtor’s policy‑making. It rejected ECL’s contention that a guarantee not invoked before the commencement of the corporate insolvency resolution process negated its status as a financial debt. Consequently, the Court affirmed the lower courts’ finding, dismissed the appeals and closed the contempt petitions.

Read the judgment and its head note on DLJ: Ecl Finance Ltd vs Abhinav Mukherjee (2026 INSC 1159).