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NCLT Indore Bench Admits Insolvency Plea Against for Rs. 6.27 Crore
The has admitted a petition against , after the company defaulted on a ₹6.27 crore debt owed to .
The Bench, comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta, held that once a financial creditor establishes the existence of a and the occurrence of , the jurisdiction under is triggered—irrespective of whether the was wilful. The Tribunal rejected the corporate debtor’s plea for six months’ time to repay, ruling that such requests cannot delay admission of a petition.
How the Debt Arose
extended two loan facilities to in , aggregating to ₹6 crore. The loans were secured by a held by the corporate debtor in , with charges duly registered with the Registrar of Companies. The facilities fell due on , but Satiate Agri failed to repay the principal and accrued interest.
After sending an email reminder on and a formal demand notice on , Excellence Finance filed the insolvency petition on , claiming a total outstanding of ₹6,27,09,615 as on the due date.
Corporate Debtor’s Admission and Plea for Time
, in its reply dated , categorically admitted availing both facilities, the occurrence of , and the computation of the amount in . However, it contended that the was neither wilful nor deliberate, but resulted from genuine and unforeseen financial constraints. The company sought six months to arrange funds through internal accruals, asset sales, and financial restructuring, arguing that admission of the petition would cause to its employees and stakeholders.
The financial creditor did not file a rejoinder, and the Tribunal proceeded on the basis of the admissions on record.
Legal Analysis: Alone Triggers CIRP
The NCLT observed that the loans, disbursed against consideration for the , constituted “” under . The existence of security () did not alter the character of the debt.
Relying on the ’s ruling in , the Tribunal noted that the ’s role under Section 7 is limited to ascertaining the existence of and . The corporate debtor’s plea of temporary financial constraints and its request for time were held to be irrelevant at this stage.
“The jurisdiction under Section 7 is triggered by the occurrence of and does not depend upon whether such was wilful or deliberate. Likewise, the Corporate Debtor's request for time to repay the admitted liability cannot be a ground to defer admission of the Petition,” the Bench held.
The Tribunal also found the petition to be within the limitation period under , and confirmed that the application was complete in all respects, including the requisite Form-2 from the proposed .
Key Observations from the Judgment
- “The aforesaid facilities, having been disbursed against consideration for the , constitute ‘’ within the meaning of .”
- “The existence of such security, however, does not affect the character of the underlying debt as .”
- “The said plea cannot constitute a defence to a petition under Section 7 once the existence of and occurrence of are established.”
The Tribunal’s Order
The NCLT admitted the petition and ordered the initiation of CIRP against . It appointed , through its designated partner Mangesh Vitthal Kekre, as the . A under was declared, prohibiting the institution or continuation of suits, transfer of assets, enforcement of security interests, and recovery of possession of property.
The IRP was directed to make a public announcement, collate claims, and constitute a within 30 days. The suspended board of directors and all personnel of the corporate debtor are obliged to extend full cooperation to the IRP.
The financial creditor was directed to deposit ₹50,000 with the IRP within one week to meet initial CIRP costs, subject to adjustment by the .
Significantly, the Tribunal clarified that the parties are free to settle the matter at any stage under , keeping the door open for an .
The , and the were directed to update their records to reflect the initiation of CIRP against .
