Existence of Financial Debt and Default Above Statutory Threshold Sufficient to Initiate CIRP u/s 7: NCLT Allows ₹28.51 Cr Insolvency Petition [Read Order]

The National Company Law Tribunal (NCLT) Mumbai Bench has allowed an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Bank of India initiating the Corporate Insolvency Resolution Process (CIRP) after finding clear evidence of financial debt and default exceeding the statutory threshold.

The Bank of India had extended financial assistance to the Corporate Debtor, Neurostar Hospital Private Limited in the form of a term loan of ₹20.45 crore in 2020 and a working capital term loan of ₹5.85 crore in 2022 under the GECL scheme amounting to an exposure of ₹26.30 crore. These amounts were secured through tangible assets and equitable mortgage of immovable property located in Pune.

The Corporate Debtor defaulted in repayment on 28 February 2023, and its account was classified as a Non-Performing Asset (NPA) on 29 May 2023.The total amount of debt due from the Corporate Debtor was claimed to be ₹28.51 crore. Notwithstanding the issue of a demand notice under the SARFAESI Act the amount continued to remain unpaid.

Further, the Financial Creditor contended that the Corporate Debtor had acknowledged the debt and executed all necessary loan and security documents. Moreover, it presented the NeSL report along with full documentary proof which included loan documents, statement of accounts and security documents.

The Corporate Debtor did not file any pleading in response to the service of notice to it.

The Tribunal highlighted that the case had been brought up within the stipulated period of three years from the date of default. Additionally, the default had been verified by the documents available on record and in the form of documentary evidence.

The Bench comprising Nilesh Sharma [Judicial Member] and Sameer Kakar [Technical Member] found that the Financial Creditor had sufficiently proved that the financial debt and default existed. Therefore, the application was admitted and insolvency proceedings were initiated under section Section 14 of the IBC.

The Bench emphasized that during admission under Section 7 there is no requirement on the part of the Adjudicating Authority to undertake detailed scrutiny of any disputes and adjudication.Therefore, the Tribunal admitted the application.

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