NCLT Admits Piramal Capital’s Insolvency Plea Against Prithvi Residency
The National Company Law Tribunal (NCLT), Mumbai by its division member bench of Justice Kishore Vemulapalli (Judicial Member) and Prabhat Kumar (Technical Member) admitted an application filed by Piramal Capital and Housing Finance Limited, the Financial Creditor/Applicant, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), against Prithvi Residency Private Limited, Corporate Debtor, for initiating Corporate Insolvency Resolution Process (CIRP).
The case of the Financial Creditor was that the Dewan Housing Finance Limited (“DHFL”) was taken over by M/s Piramal Capital & Housing Finance Limited. The NCLT Mumbai vide order dated 7th June, 2021 the loan sanctioned in favor of the Corporate Debtor by DHFL, for a sum of Rs. 485 crore, on the terms and conditions contained under Sanction Letter dated 24 March, 2017 stood transferred to M/s Piramal Capital and Housing Finance Limited i.e., Financial Creditor.
Pursuant to the Loan Agreement between the Corporate Debtor and DHFL dated 21 October, 2016, DHFL granted loan facility to the corporate debtor on the terms and conditions stated therein. Pursuant to the of the aforesaid Loan Agreement the Corporate Debtor executed several documents namely Simple Mortgage, Escrow Agreement, Deed of Hypothecation and a Demand Promissory Note inter-alia, securing the loan sanctioned by the Financial Creditor in favor of the Corporate Debtor.
During November 2016 to June 2017, the Financial Creditor disbursed a total sum of Rs. 484,95,00,000 to the Corporate Debtor. Under the revised Sanction Letter dated 24 March, 2017, an interest moratorium of 15 months with effect from 01.01.2017 was provided with annual servicing of interest. First such annual interest servicing was to be made on 31 March, 2018.
It was contended that the Corporate Debtor had committed various events of default under the loan agreement and first default occurred on 31 March, 2019.
The Financial Creditor wrote letters dated 27 January, 2020 and 26 December, 2019 asking the Corporate Debtor to cure the non-compliances to the sanctioned conditions but no action was taken by the Corporate Debtor. Finally, the Financial Creditors issued notice dated 23 April, 2020 informing the Corporate Debtor that he had failed to pay two Pre EMIs amounting to Rs. 113,23,58,250/- and recalled the entire loan amount of Rs. 615,12,05,804/- asking the Corporate Debtor to pay this amount within 7 days from the of date of notice. However, the Corporate Debtor defaulted to pay the recalled amount.
The bench opined that for the purpose of computation of limitation period, 1 year 11 months and 13 days shall be excluded and the date for expiration of the limitation period from the date of default of the Respondent/Corporate Debtor being, 31 March, 2019 comes to 13 March, 2024. As per the given fact that the captioned Petition was filed on 5 June, 2022, the same was filed way before the expiry of the limitation period on 13 March, 2024. Hence, for the aforesaid reason as well, the captioned Petition was within limitation.
Further, the bench noted, “on perusal of the documents submitted by the Applicant, financial debt amounting to more than Rs.1,00,00,00, being the threshold limit as specified in the notification no. S. O. 1205 (E) dated 24 March, 2020 issued under section 4 of the IBC, is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, we find it a fit case to allow the application filed for initiation of CIRP under Section 7 of the Code against the corporate debtor.”
Accordingly, the NCLT admitted the application and appointed Mr. Jayesh Natvarlal Sanghrajka as an Interim Resolution Professional to carry out the functions as mentioned under the IBC.