NCLT Admits Insolvency Plea Over ₹98 Crore Debt Arising from Inter-Corporate Loan Default [Read Order]

The Mumbai Bench of the National Company Law Tribunal (NCLT) has admitted a Section 7 insolvency application filed by DSM Projects Private Limited against A.N. Enterprises Infrastructure Services Private Limited over a default exceeding ₹98 crore.

The case arose from a loan agreement dated September 6, 2017, under which DSM Projects disbursed ₹63 crore to A.N. Enterprises as an Inter-Corporate Deposit for business and working capital purposes. The repayment tenure was fixed at 4 years and 6 months, with the last repayment due by March 13, 2022.

Despite partial repayments totalling ₹4.5 crore, the Corporate Debtor failed to clear the outstanding amount. As of December 2024, the total claimed default stood at ₹60.19 crore in principal and ₹38.87 crore in accrued interest, aggregating to over ₹99 crore.

DSM Projects applied on December 16, 2024, within the three-year limitation period under Article 137 of the Limitation Act. The Financial Creditor also proposed Mr. Pradeep Kumar Chakravarty as the Interim Resolution Professional (IRP), whom the Tribunal has now appointed.

In its reply, A.N. Enterprises did not dispute the loan disbursement or the existence of the debt. However, it claimed that correspondence cited as acknowledgements of debt was made “without prejudice” and should not be considered binding. The Debtor also pointed to an arbitration clause in the loan agreement and urged the Tribunal to refer the matter to arbitration under the Arbitration and Conciliation Act, 1996.

The Debtor blamed delayed repayments on unexpected business setbacks, including the abrupt termination of government contracts and the economic fallout of the COVID-19 pandemic. It argued that these challenges temporarily rendered it incapable of meeting its obligations and sought more time, 12 to 18 months, to repay the dues in a phased manner.

The NCLT noted that the Corporate Debtor had repeatedly acknowledged its debt in written communications and balance confirmations issued until FY 2023–24. The Tribunal also observed that the arbitration clause did not exclude its jurisdiction under the Insolvency and Bankruptcy Code (IBC), citing the Supreme Court’s ruling in Indus Biotech Pvt. Ltd. v. Kotak India Venture (Offshore) Fund.

After reviewing the bank statements, loan agreement, repayment schedule, and balance confirmations, the NCLT found that the financial creditor disbursed a valid financial debt. The default occurred on March 13, 2022, as the final due date passed without repayment. It was also noted that the Corporate Debtor acknowledged the outstanding debt.

It was held that the application was complete and within the limitation period, that the default had been clearly established, and that mere invocation of an arbitration clause could not be used as a shield against insolvency proceedings.

The Tribunal held that the ingredients under Section 7 of the IBC had been satisfied. As a result, the CIRP against A.N. Enterprises Infrastructure Services Pvt. Ltd. stands admitted. A moratorium under Section 14 of the IBC was declared with immediate effect. Mr. Pradeep Kumar Chakravarty has been appointed as the Interim Resolution Professional.

DSM Projects was directed to pay ₹2 lakh towards initial CIRP costs, and the IRP was tasked with issuing public announcements, inviting claims, and taking control of the Corporate Debtor’s operations. Under Section 19 of the IBC, all stakeholders, including promoters and personnel of the Corporate Debtor, are directed to cooperate with the IRP.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates