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ARTICLE · 03 NOVEMBER 2026

Related By Contract: ECL Finance v. Abhinav Mukherjee

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The SC dismissed the appeals by ECL Finance Limited (“ECL”), as debenture holder and lender, and IDBI Trusteeship Services Limited (“ITSL”), as debenture trustee. It upheld the concurrent findings of the NCLT and the NCLAT that ECL was a related party of the corporate debtor under Section 5(24) of the IBC and could not form part of the committee of creditors (“CoC”).

IndiaInsolvency/Bankruptcy/Re-Structuring
Soumitra Majumdar
Soumitra Majumdar
Harvi Shah
Harvi Shah
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Background

Creditor disenfranchisement, unless for exceptionally compelling reasons, militates against the basic objective of an insolvency ecosystem. The Supreme Court (“SC”) judgment in ECL Finance Ltd. and Anr. v. Abhinav Mukherjee and Ors. (2026 INSC 1159), upholding creditor disenfranchisement simpliciter based on the covenant package in financing documents, appears to be an anomalous overreach of the moral hazard concerns in insolvency jurisprudence.

The SC dismissed the appeals by ECL Finance Limited (“ECL”), as debenture holder and lender, and IDBI Trusteeship Services Limited (“ITSL”), as debenture trustee. It upheld the concurrent findings of the NCLT and the NCLAT that ECL was a related party of the corporate debtor under Section 5(24) of the IBC and could not form part of the committee of creditors (“CoC”).

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