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2025 Supreme(Online)(NCLT) 6145
NATIONAL COMPANY LAW TRIBUNAL
Sh. Prabhat Kumar, Member (Technical), Sh. Sushil Mahadeorao Kochey, Member (Judicial)
Euro Corporate Services Private Limited – Appellant
Versus
Royal Fantasy Constructions Pvt.Ltd. – Respondent
CP (IB) 674/MB/2024
For the Financial Creditor: Adv. Rohan Agarwal, Adv. Sabeena Mahadik, Adv. Pankaj Uttarodhi
For the Corporate Debtor: Adv. Aman Kacheria, Adv. Rishabh Dhanuka
The court established that a financial debt existed and that the corporate debtor defaulted in its repayment obligations, allowing the initiation of corporate insolvency proceedings.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Financial Creditor seeks initiation of Corporate Insolvency Resolution Process against Corporate Debtor for default on financial debt. Total default claimed was Rs. 2,02,05,153/- as of 31.03.2024. Corporate Debtor contested the nature of debt claiming it was not in the form of loan. Court established the existence of a financial debt and found default due to non-repayment, allowing the admission of the petition. (Paras 32, 39, 40)
(B) Moratorium under Section 14 of the IBC - Duration of the moratorium prohibits the institution and continuation of legal proceedings against the Corporate Debtor, and protects its assets from being alienated. Specific directions for appointment of Interim Resolution Professional and management vesting are provided. (Paras 41, 42, 44)
| Table of Content |
|---|
| 1. financial creditor's petition under section 7 for recognizing financial default. (Para 1 , 4) |
| 2. transaction handled as a loan with established amounts due. (Para 5 , 12) |
| 3. recognition of a financial debt and default leading to petition admission. (Para 30 , 39) |
| 4. implementation of moratorium and appointment of interim resolution professional. (Para 41) |
ORDER
Brief Facts:
1. This Company Petition is filed under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Euro Corporate Services Private Limited, formerly known as Distent Barter Private Limited ("hereinafter referred to as the Petitioner/ Financial Creditor "), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Royal Fantasy Constructions Pvt. Ltd. ("hereinafter referred to as the Corporate Debtor/Respondent").
2. The Petitioner bearing Identification number U51909MH1995PTC142628 was incorporated on 24.03.1995 under the Companies Act, 1956 having its registered office at B-302, Citi Point, JB Nagar, Andheri (East), Mumbai 400 059. It is engaged in the business of Consultancy and Investment.
3. The Respondent is incorporated under the Companies Act, 2013 on 19.05.2008 bearing CIN U45200MH2008PTC182431 with its registered office at Upadhyay Compound, Pump House, Near Maruti Mandir, Andheri (East), Mumbai 400093. It is a Limited Company having nominal share capital of Rs.30,000,000/- and Paid up share Capital of Rs. 29,000,000/-. It is engaged in the business of construction.
4. The total amount of default as stated in Part IV of the Application is Rs.2,02,05,153 /- (Rupees Two Crores Two Lakhs Five Thousand One Hundred and Fifty Three only) along with interest @ 9% p.a. and further interest payable thereon, and the date of default is stated to be 13.08.2024.
Submissions of the Petitioner:
5. The Petitioner had paid the following amounts from time to time to the Corporate Debtor :
6. Out of above sums, a sum of Rs. 1,60,000/- was appropriated towards purchase of shares of Corporate Debtor by the Petitioner. Further, a sum of Rs. 5,00,000/- was paid back in Year 2012-13, an aggregate sum of Rs. 48,84,000/- in 2013-14, Rs. 10,00,000/- in Financial Year 2015-16, an aggregate sum of Rs. 12,30,000/- in Financial Year 2017-18, an aggregate sum of Rs. 57,00,000/- in Financial Year 2018-19, a sum of Rs. 35,00,000/- in Financial Year 2019-20, an aggregate sum of Rs. 1,28,50,000/- in Financial Year 2020-21, an aggregate sum of Rs. 24,35,000/- in Financial Year 2021-22, and an aggregate sum of Rs. 11,35,160/- in Financial Year 2022-23. Further, a sum of Rs. 6,50,000/- is credited to account of Corporate Debtor on account of purchase of motor car in Financial year 2023-24. The interest on the amounts outstanding is being credited each year from Financial Year 2011-12. A balance confirmation of account duly signed by the authorized signatory of corporate debtor reflects a balance of Rs. 1,94,28,032.00 payable as on 31.3.2024, which is in agreement with the ledger account placed by the Petitioner.
7. It is stated that the Financial Creditor and Corporate Debtor had orally agreed that interest @ 12% p.a. would be payable by the Corporate Debtor on the sums advanced and the Corporate Debtor has in fact made part payments to the Financial Creditor and has also deducted Tax Deducted at Source on the interest amounts and deposited the same with the statutory authorities.
8. It is further stated that the Corporate debtor has paid interest @ 12% till March 2022. Thereafter the Corporate Debtor requested the Financial Creditor to reduce the interest rate as the Corporate debtor was facing financial crunch due to Covid-19 pandemic. Accordingly, the Financial Creditor agreed to interest @ 9% p.a. from April 2022 onwards.
9. It is further stated that, since construction of project of Corporate Debtor was getting delayed Corporate Debtor informed Financial Creditor that it is not able to repay the outstanding funds as of 31st March 2018, accordingly, in May
