The National Company Law Tribunal (NCLT), Kolkata Bench-II, has admitted Samsara Energy Limited into the Corporate Insolvency Resolution Process (CIRP) following a successful petition by SREI Equipment Finance Limited. The tribunal determined that the corporate debtor defaulted on mandatory interest payments, rendering the insolvency application maintainable despite a nine-year moratorium on the repayment of the principal loan amount. This ruling clarifies that moratorium clauses governing principal recovery do not automatically shield a debtor from legal consequences arising from the failure to service monthly interest obligations.

The dispute stemmed from a financial arrangement established in December 2018, under which SREI Equipment Finance Limited sanctioned a credit facility of ₹50 crore to Samsara Energy Limited, with approximately ₹39 crore subsequently disbursed. While the loan agreement featured a nine-year moratorium period for the principal, it simultaneously mandated the timely payment of interest. The financial creditor contended that persistent defaults in these monthly interest payments for several consecutive quarters—specifically ending in December 2023, March 2024, June 2024, and September 2024—constituted an event of default, triggering the right to recall the entire loan facility.

Samsara Energy Limited contested the move, arguing that the petition was premature. Relying on the repayment schedule outlined in the loan agreement, the corporate debtor maintained that the nine-year moratorium period had not yet elapsed, meaning the financial creditor could not claim a default based on the alleged date of May 31, 2024. Furthermore, the company asserted that as a registered Micro, Small, and Medium Enterprise (MSME), it was entitled to protections under various Reserve Bank of India circulars concerning loan restructuring, particularly in the context of financial stress induced by the pandemic. The respondent further argued that the financial creditor’s simultaneous pursuit of a separate application under Section 66 of the Insolvency and Bankruptcy Code, alleging fraudulent transactions, created a conflict of interest that rendered the current Section 7 petition untenable.

The bench, comprising Judicial Member Labh Singh and Technical Member Rekha K. Shah, thoroughly scrutinized the contractual terms. The tribunal observed that the loan agreement was explicit regarding the consequences of non-payment. According to the court, "It was also agreed by Clause 7.1.2 of loan agreement that nonpayment of interest by the Corporate Debtor to the Financial Creditor as and when the interest amount falls due for payment shall amount to an event of default ." The bench found no ambiguity in the agreement, noting that the moratorium was strictly limited to the principal repayment and did not extend to the recurring interest obligations. By failing to remit these payments as agreed, the corporate debtor had breached the terms, thereby crystallizing a default that fell well within the threshold required for invoking the Insolvency and Bankruptcy Code .

Regarding the corporate debtor’s objection concerning the pending Section 66 proceedings, the tribunal relied on established judicial precedents to separate the issues. It affirmed that a claim of fraudulent or avoidable transactions is a distinct legal process that does not bar a financial creditor from initiating insolvency proceedings to recover its dues. The bench noted, "The question whether the loan transaction is fraudulent transaction within the meaning of Section 66 is engaging attention of the Adjudicating Authority in a separate application... which needs no consideration or observation in the present proceeding." Consequently, the tribunal held that the two legal avenues could proceed simultaneously, as they address different facets of the corporate debtor’s obligations and the lender's rights under the framework.

The tribunal also addressed the validity of the evidence presented, highlighting that records of financial information submitted via the National e-Governance Services Limited (NeSL) corroborated the existence of a debt exceeding the statutory minimum threshold. The CIBIL report and internal records confirmed both the disbursement of the ₹39 crore and the mounting overdue interest, which as of May 2024, totaled over ₹6 crore. With the application found to be complete in all procedural respects and the debt established, the tribunal declared that the requirements for admitting the petition had been met.

To manage the resolution process, the NCLT appointed Jitendra Lohia as the Interim Resolution Professional (IRP). The IRP is tasked with taking immediate control of the corporate debtor’s operations, issuing a public announcement to invite claims, and ensuring the protection and preservation of the company’s assets. The tribunal directed the financial creditor to deposit ₹3 lakh with the IRP to cover initial expenses, subject to final adjustments during the resolution process.

As a direct consequence of this order, a moratorium under Section 14 of the Code has been imposed. This freeze prohibits the institution or continuation of any suits or proceedings against Samsara Energy Limited, prevents the transfer or disposal of its assets, and bars any action to foreclose or recover security interests. This moratorium is designed to ensure the orderly conduct of the CIRP and prevent further erosion of the company’s asset base. The former management and employees are now legally obligated under Section 19 of the Code to provide full cooperation to the IRP. Any failure to comply with the IRP’s directions or discovery of further malfeasance by the ex-directors may result in additional proceedings before the tribunal. The registry has been directed to communicate this order immediately to all relevant stakeholders, including the Registrar of Companies, to facilitate the transition into the insolvency process.