Corporate Applicant’s Own Petition under IBC S. 10 Admitted: NCLT Initiates CIRP on Finding Default Due and Payable Beyond IBC Section 4(1) Threshold [Read Order]

In a recent case, the National Company Law Tribunal (NCLT) Mumbai Bench initiated the Corporate Insolvency Resolution Process (CIRP) against the corporate applicant on finding a default due payable.

The Company Petition is filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 (“Code”) by Asis Corporate Advisors Limited (“Corporate Applicant/ACAL”), seeking to initiate its own Corporate Insolvency Resolution Process (“CIRP”). The Corporate Applicant is preferring the said application owing to financial stress faced by it, consequent to which it is not in a position to repay the debts due to its creditors.

The Corporate Applicant is a company limited by shares registered under the Companies Act, 1956 incorporated on 14.09.2000 having CIN U72100MH2000PLC128709 and having its registered address. Therefore, the Bench has jurisdiction to entertain and decide the Petition. The Authorised Capital of the Corporate Applicant is Rs. 5,00,00,000/- and paid up capital is Rs. 2,61,20,000/-. The Corporate Applicant is engaged in the business of advising on export and import and financing matters.

The amount in default and the total debt raised as stated in Part III of the Petition are Rs. 116,11,26,634.56/- (Rupees One Hundred and Sixteen Crore Eleven Lakhs Twenty Six Thousand Six Hundred and Thirty Four Rupees and Fifty Six Paise Only) as on 25.10.2024 and Rs. 20,00,00,000/- (Rupees Twenty Crore only) respectively.

The Corporate Applicant has passed a resolution in the board of directors meeting held on 25 March 2025 and resolved to file the application under Section 10 of the Code before this bench for the initiation of CIRP. The Corporate Applicant had been doing certain trading activities earlier during the period till March 2013.

The shareholders of the Corporate Applicant are Mrs. Anu Agarwal, Mr. Gaurav Agarwal, Mrs. Asha Agarwal, Mr. Saurav Agarwal, Mr. Rakheshkumar Agarwal, Mrs. Anita Bansal, Mr. Ameet Bansal, and Mr. Sumit Bansal. Mrs. Anu Agrawal died on 08.04.2025, however, the effect of transfer of shares held by her has not yet been recorded in the records of the Corporate Applicant.

The Corporate Applicant had invested a total amount of Rs. 43,15,36,230/- in the group companies, viz. Shirdi Panel Industries Limited, Asis Logistics Limited, Asis Global Limited & Asis Plywood Limited from a period prior to 2010 to 2012, which have undergone CIRP under the code.

The Corporate Applicant had given corporate guarantees in respect of credit facilities availed by above mentioned group companies. The claim amounts to various creditors of the Corporate Applicant as guarantors, based on documents filed by the creditors during the CIRP or made available to the Corporate Applicant.

The Corporate Applicant was also required to pay an amount of INR 28,00,00,000/-- (Rupees Twenty-Eight Crore) to Labh Capital Service Limited (LCSL). LCSL has initiated proceedings for recovery against the Corporate Applicant before the City Civil Court in Commercial Suit No. 215 of 2022. In compliance with directions given by the City Civil Court, the following assets have been sold by the Corporate Applicant in FY 23-24.

The amounts of sale proceeds have been utilized to pay debt in accordance with orders passed by the City Civil Court. The outstanding amount as on date is INR 3,49,85,434/- (Rupees Three Crore Forty Nine Lakhs Eighty Five Thousand Four Hundred and Thirty Four Only).

The collateral security of the Corporate Applicant charged to State Bank of India has been given under Leave & License Agreement to Shirdi Panel Industries Limited (SPIL) against which the Corporate Applicant had taken security deposit of INR 2,00,00,000/- (Rupees Two Crore only) which the Corporate Applicant was unable to repay. The possession of the property remains with SPIL in compliance with the order passed by City Civil Court in Commercial Suit No. 215 of 2022.

As the Corporate Applicant has negative net worth since the last several years, no recurring business, and also no free assets/means to discharge the liabilities, the present application under Section 10 of the Code has been filed.

The Corporate Applicant has suggested the name of Mr. Devendra Jain for appointment as the Interim Resolution Professional (“IRP”). The proposed IRP has also submitted his Consent in Form 2 confirming eligibility and that there are no disciplinary proceedings pending against him.

After hearing the submissions and upon perusing the supporting documents annexed with the Petition, a two member bench of Prabhat Kumar, Member (Technical) and Sushil Mahadeorao Kochey, Member (Judicial) viewed that the application made by the Corporate Applicant is complete in all respects as required by law. It clearly shows that the Corporate Applicant is in default of a debt due and payable, and the default is in excess of the minimum amount stipulated under section 4(1) of the IBC, at the relevant time.

Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits the Petition and orders initiation of CIRP against the Corporate Applicant. Public announcement of the CIRP shall be made immediately as specified under section 13 of the IBC read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

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