SREI Equipment Finance Limited Vs SRK Infracon (India) Private Ltd (NCLT Hyderabad)
The National Company Law Tribunal admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiation of Corporate Insolvency Resolution Process (CIRP) against a corporate debtor after finding clear existence of financial debt, continuing default, and a valid claim within limitation.
The financial creditor had extended term loan facilities aggregating to Rs. 44 crore under loan agreements dated 13 December 2019 and 25 June 2020 for purchase of heavy-duty vehicles intended for infrastructure projects. The vehicles were held as collateral security against the disbursed loans. Subsequently, upon default in repayment obligations, the corporate debtor sought restructuring of its outstanding liabilities. The creditor accepted the request, resulting in restructuring of dues at Rs. 53.02 crore under an Addendum Sanction Letter dated 18 May 2023 and an Amendatory and Supplemental Agreement dated 1 June 2023. Supporting documents included loan agreements, sanction letters, deed of hypothecation, memorandum of title deeds, and the debtor’s restructuring request letter.
Despite restructuring, the debtor failed to comply with the revised repayment terms. Under Clause 7 of the Addendum Sanction Letter, the borrower was required to cure the default within 15 days by paying overdue amounts with interest, failing which the creditor became entitled to accelerate repayment and demand the full outstanding dues along with penal charges. The creditor thereafter issued a cure notice dated 26 September 2023, followed by demand notices dated 13 October 2023 and 6 August 2024. No payment was made despite repeated reminders. The restructuring was ultimately cancelled on 11 November 2024 because of continued non-payment. Following cancellation, liability reverted to the original loan terms, and total outstanding dues were computed at Rs. 97.34 crore as on 5 August 2024, including instalment overdue amounts, principal outstanding, overdue charges, and other contractual charges.
