NCLT Admits HDFC Bank's Insolvency Petition u/s 7 citing clear acknowledgment of liability , Initiates CIRP [Read Order]
The bench emphasized that the existence of a debt and the occurrence of default are sufficient conditions for admission under Section 7 of the IBC, and these were duly established from statutory sources, making the alleged lack of documentation untenable.
The National Company Law Tribunal (NCLT), Indore Bench, has admitted a Section 7 application filed by HDFC Bank Limited against Shri Bhagwati Agro Industries Private Limited, leading to the initiation of a Corporate Insolvency Resolution Process (CIRP) citing clear acknowledgment of liability..
The application was filed by HDFC Bank Limited ("Financial Creditor") under Section 7 of the Insolvency and Bankruptcy Code, 2016, for an alleged financial debt of Rs. 10,44,03,044.07. The petitioner asserted that it had extended various credit facilities to the Corporate Debtor for its working capital requirements over several years. The account was classified as a Non-Performing Asset (NPA) on July 28, 2024, and subsequent demands for repayment, including a notice under the SARFAESI Act, remained unpaid.
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The Corporate Debtor, in its affidavit in reply, contested the maintainability of the petition. It argued that the applicant had not filed sufficient supporting documents like loan agreements or conclusive proof of disbursement. It was also submitted that the sanction facilities were valid only until a specific date, and the Financial Creditor had not demonstrated a continuing liability or a default above the statutory threshold of Rs. 1 crore.
A division bench of Justice Brajendra Mani Tripathi and Member (Technical) Man Mohan Gupta, after a detailed analysis, rejected the contentions of the Corporate Debtor. The Tribunal found that the certificate from the Information Utility (NESL) showing the default, read with the Corporate Debtor's own proposal for a One-Time Settlement (OTS), constituted a clear acknowledgment of liability.
The bench emphasized that the existence of a debt and the occurrence of default are sufficient conditions for admission under Section 7 of the IBC, and these were duly established from statutory sources, making the alleged lack of documentation untenable.
Accordingly, the Tribunal admitted the Section 7 application and declared a moratorium under Section 14 of the IBC. Ms. Teena Saraswat Pandey, a registered Insolvency Professional, was appointed as the Interim Resolution Professional to manage the CIRP.
The Tribunal directed that the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended during the moratorium period. The Financial Creditor was also directed to pay an advance of Rs. 1,00,000 to the Interim Resolution Professional to cover the costs of initiating the process.
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