NCLT Admits CIRP against Garima Real Estate for Defaulting on Rs. 1.15 Crore Debt to Investors [Read Order]

In a recent ruling, the National Company Law Tribunal (NCLT), Indore Bench, admitted a Section 7 application filed by a group of 125 investors against Garima Real Estate & Allied Ltd., initiating the Corporate Insolvency Resolution Process (CIRP) for a default of over Rs. 1.15 crore.

The application originated from an investment scheme in which the company had promised fixed returns to its investors. The Securities and Exchange Board of India (SEBI) had, in 2016, barred the company from raising funds under such schemes and directed it to refund investors, an order which the Corporate Debtor failed to comply with.

The Corporate Debtor did not appear before the Tribunal, and the proceedings were conducted ex parte.

The Financial Creditors, represented by Bhojraj Verma, argued that they were recognized as financial creditors under a government notification. They contended that the investments constituted a "financial debt" under Section 5(8)(a) of the IBC and that the petition met all statutory requirements, including the post-2019 amendment threshold of 100 joint creditors and the minimum debt of Rs. 1 crore.

The NCLT bench, comprising Justice Mohan P. Tiwari (Judicial) and Sanjeev Sharma (Technical), held that the investors' claim constituted a "financial debt" and that the petition was maintainable. The Tribunal relied on authoritative NCLAT pronouncements to affirm the status of the investors as financial creditors and confirmed that all procedural thresholds for filing the application were met.

Consequently, the NCLT found that a financial debt and default had been established and admitted the petition. A moratorium was declared, and Mr Gagan Gulati was appointed as the Interim Resolution Professional to take over the management of Garima Real Estate & Allied Limited and oversee the resolution process.

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