CIRP Plea Against Respondent Was to Be Admitted as CD’s Balance Sheet Showed Defaults in Short-Term Borrowings | NCLT

Case Details: IDBI Bank v. Saraju Flour Mills (P.) Ltd. - [2024] 159 taxmann.com 497 (NCLT - Kolkata)

Judiciary and Counsel Details

• Rohit Kapoor, Judicial Member & Balraj Joshi, Technical Member
• Shaunak Mitra & Siddhant Makkar, Advs. for the Financial Creditor
• Nimish Mishra & Debjit Mukherjee, Advs. for the Corporate Debtor

Facts of the Case

In the instant case, the applicant (i.e. financial creditor) granted several credit and cash facilities to the Respondent (i.e. the corporate debtor). However, the corporate debtor defaulted in making repayment of such facilities and, accounts of the corporate debtor were declared NPA by the financial creditor Bank on 31.03.2014.

Thereafter, on 13.10.2018, the financial creditor offered a One Time Settlement (OTS) to the corporate debtor vide letter dated 23.10.2018. The said offer was duly accepted by the corporate debtor in their letter dated 29.12.2018 and, the financial creditor also approved the said OTS settlement amount.

However, the corporate debtor failed to honour the terms of repayment of OTS, because of which the settlement stood revoked. The financial creditor filed an instant petition u/s 7 of the IBC seeking initiation of the CIRP against the corporate debtor on account of non-payment of the alleged debt.

It was noted that the financial creditor extended the OTS offer to the corporate debtor and the same was accepted by the corporate debtor. The NCLT observed that the settlement proposal provided for payment of the balance amount within 30 days from the date of the Letter of Approval of OTS i.e., 11.01. 2019 hence, this fell within the ambit of acknowledgement of debt due and payable.

The NCLT, further observed that the balance sheet for the year ending as on 2017-2018 of the corporate debtor reflected that the corporate debtor had certain short-term borrowings, which showed that there existed cash credit facilities from financial creditor Bank.

Further, as per the Auditor’s report of the corporate debtor for the financial year ending as on 2017 – 2018, it was stated that the corporate debtor had defaulted in repayment of loans or borrowings to financial institutions and banks.

NCLT Held

The NCLT held that the petition filed by the applicant established that the corporate debtor was in default of a debt due and payable and, that default was more than the minimum amount stipulated under section 4 (1) of the IBC and therefore, the petition filed against respondent was to be admitted.