The court held that the application under the Insolvency Code is barred by limitation and cannot be used for merely recovering debts.

ORDER

PER: ATUL CHATURVEDI, MEMBER (TECHNICAL)

1. The instant Company Application is filed by M/s. Augment Finvest Pvt. Ltd. (‘Applicant/ Financial Creditor’) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘Code’ read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiating the Corporate Insolvency Resolution Process (‘CIRP’) against M/s. Vipul Ltd. (‘Respondent/Corporate Debtor’) having CIN: L65923DL2002PLC167607 on the ground that the Corporate Debtor had committed a default in payment of Rs. 7,86,52,643/- including interest at 16% per annum as on 31.01.2025.

2. The Corporate Debtor i.e. M/s. Vipul Ltd. having CIN: L65923DL2002PLC167607 incorporated on 05.06.1991 under the Companies Act 1956 is having its registered office situated at Unit No. 201, C-50, Malviya Nagar, New Delhi, 110017. Since the registered office of the Corporate Debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code.

3. Briefly stated facts of the case as mentioned in the Company Application, which are relevant to the issue in question, are as follows:-

a. The present Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is filed to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for its failure to repay a sum of Rs. 7,86,52,643/- (Rupees Seven Crore Eighty-Six Lakh Fifty-Two Thousand Six Hundred Forty-Three Only) along with interest at 16% per annum, being the admitted financial debt availed from the Financial Creditor and remaining in default.

b. The Applicant submitted that the Financial Creditor is a company incorporated under the Companies Act, 1956, presently governed by the Companies Act, 2013, and is a Non-Banking Financial Company (NBFC) engaged in financial and investment services, enjoying strong goodwill in the market. Mr. Akshya Kumar Parida has been duly authorized to act on its behalf pursuant to a Board Resolution dated 05.03.2025. The Corporate Debtor is a company incorporated under the Companies Act, 1956, presently governed by the Companies Act, 2013, and is engaged in the real estate business.

c. The Applicant further submitted that the Corporate Debtor, requiring financial assistance for business expansion, approached the Financial Creditor with requests for a loan. After due negotiations, the Financial Creditor agreed to extend a loan of Rs. 2,40,00,000/- (Rupees Two Crore Forty Lakh Only), which was duly disbursed in full to the Corporate Debtor, repayable with applicable interest.

d. The Corporate Debtor sought extensions for repayment of the financial loan, which were granted by the Financial Creditor from time to time. However, upon expiry of the extended period, the Corporate Debtor defaulted on repayment. Subsequently, the Corporate Debtor and its Promoter, Mr. Punit Beriwala, requested further time, leading to a Loan Restructuring Agreement, wherein the Corporate Debtor agreed to pay a lump sum of Rs. 4,80,00,000/- (Rupees Four Crore Eighty Lakh Only), inclusive of interest and charges up to 30.11.2021, with further interest at 16% per annum from 01.12.2021 until full payment.

e. The Applicant stated that the Corporate Debtor again approached the Financial Creditor citing financial difficulties and sought further extension for repayment of the restructured loan, which was duly granted. It is submitted that the parties have had prior financial dealings in the ordinary course of busi