NCLT Chennai Admits Insolvency Petition Against Pradhin Limited For Outstanding Default Of Twelve Crore Rupees

The National Company Law Tribunal (NCLT) Chennai has officially admitted a plea under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Pradhin Limited. A bench comprising Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam passed the order on July 2, 2026, following a petition filed by financial creditor Tatad Nayan Gautambhai.

Case Background

The dispute stems from an unsecured loan agreement dated September 3, 2024, wherein the petitioner advanced ₹11 crore to the firm at an interest rate of 18% per annum. While the total disbursement amounted to ₹10.83 crore, the company's liability, including interest, escalated to ₹12.98 crore by the due date of September 30, 2025. Although the corporate debtor had initially issued post-dated cheques to honor the repayment, it later informed the creditor of its inability to pay due to liquidity constraints.

Arguments and Contentions

During the proceedings, Pradhin Limited acknowledged the outstanding debt but requested leniency, citing that it was not a "sick" company but one dealing with temporary market volatility, increased costs of raw materials, and liquidity issues. The respondent argued that forced insolvency would disrupt its ongoing revival efforts.

However, the petitioner maintained that the debt was undisputed and verifiable through records at the National e-Governance Services Limited (NeSL). The tribunal emphasized that its role in a Section 7 application is limited to verifying the existence of debt and the fact of default.

Key Observations

The Tribunal clarified the scope of its jurisdiction , stating: * "The IBC is a complete code in itself. The Adjudicating Authority and the Appellate Authority are creatures of the statute. Their jurisdiction is statutorily conferred." * "Once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7." * "In case the record of Information Utility shows that there is a debt which is in default , the Adjudicating Authority or the Appellate Authority are not required to further examine the record."

Judicial Decision

The NCLT bench rejected the plea for further grace periods, noting that commercial hardship does not negate contractual obligations. Consequently, the tribunal admitted the petition and appointed Rajesh Jasti as the Interim Resolution Professional (IRP) to oversee the resolution process.

A moratorium under Section 14 of the IBC has been declared, prohibiting the institution or continuation of suits and the alienation of assets to preserve the company’s value during the CIRP. The management and powers of the Board of Directors of Pradhin Limited are now vested with the appointed IRP, who has been directed to submit a report within 20 days. This ruling reinforces the judiciary's strict approach toward upholding financial covenants under the insolvency framework.