Corporate Debtor's solvency precludes initiation of insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code despite claim exceeding threshold amount.

ORDER

(Hearing conducted through Hybrid Mode)

1. This Petition has been jointly filed under Section 7 of Insolvency and Bankruptcy Code, 2016 by two HUF’s namely, M/S. VINAY ASRANI HUF & M/S DAMODAR HARIRAM HUF (hereinafter referred to as ‘Financial Creditors/ FCs’ seeking to initiate Corporate Insolvency Resolution Process against RAJKHAM BUILDERS PRIVATE LIMITED (hereinafter referred to as ’Corporate Debtor’/ CD).

Petitioner Submissions

2. In Part-I of the Petition it is averred that Petitioners/ Financial Creditors namely, M/s. Vinay Asrani HUF and M/s. Damodar Hariram HUF are Hindu Undivided Families incorporated on 23.10.1996 and 01.04.1968, having PAN identification AACHV3093E and AAAHD0181K respectively.

3. In Part-II of the Petition states that the Corporate Debtor is a private limited company incorporated on 21.04.2008, under the companies Act, 1956. The Registered office of the Corporate Debtor is at New No.105, Arcot Road, Kodambakkam, Chennai, Tamil Nadu – 600 024, which is under the jurisdiction of this Tribunal.

4. In Part – III, the Petitioners has proposed Mr. Mathur Sabhapaty Viswanathan having Registration No. IBBI/IPA-001/IP-P00674/2017-18/11148 to act as the Interim Resolution Professional.

5. In Part – IV of the Petition, it is stated that the amount claimed to be in default is Rs.1,32,44,000/- in which the Principal sum is Rs.1,10,000/- and the interest amount is Rs.22,44,000/-. The Date of Default is mentioned as 09.09.2022.

6. It is averred in the petition that the Corporate Debtor is in the business of building and development of new residential apartments and projects. The Corporate Debtor had approached the Financial Creditors to borrow money for funding their construction projects.

7. It is stated that, the CD through its Board Resolution dated 12.09.2018 authorized its Managing Director, Mr. Arumugam for raising funds from the Petitioners. The Petitioners had disbursed the Loan amount of Rs.70,00,000/- between 12.09.2018 and 20.09.2018 and in turn CD had executed 5 demand Promissory Notes in favour of the Kartas and the representatives of the Petitioners.

8. It is averred that, the CD had failed to make payments with respect to the said loans and at the same time it was in need of additional funds to complete their projects.

9. It is stated that, the CD through its Proprietorship concern, M/s. Rajkham Housing represented by its Proprietor Mr. Arumugam, who is also the managing director of the CD, approached two other family members of the petitioners who were also lending money for further loans.

10. It is stated that, the CD Rajkham Builders Private Limited, its proprietorship concern M/s. Rajkham Housing, the petitioners and their other lenders/ family members entered into a Loan Agreement dated 20.01.2022. The Loans that were borrowed earlier by the CD from the petitioners which amounts to Rs.1,10,00,000/- (which includes the outstanding interest amount) has been restructured and the CD accepted the same on the Date of execution of the above Loan Agreement.

11. It is stated that as per the Loan Agreement dated 20.01.2022, the CD was liable to repay the petitioners jointly a principal sum of Rs.1,10,00,000/- along with interest calculated at 1.7% per month.

12. It is highlighted that, the said loan agreement was entered between the CD, Rajkham Bu