Minor Discrepancies in Default Date and Dues Cannot Defeat Section 7 Petition: NCLT

Bank of Maharashtra Vs Comet Granito Private Limited (NCLT Ahmedabad)

Summary: Bank of Maharashtra filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of CIRP against Comet Granito Private Limited over outstanding dues arising from a Bill Discounting/TReDS Financing Facility. The Financial Creditor claimed total outstanding debt of Rs.4,52,67,984/- as on 29.09.2025, including principal of Rs.4,19,95,603/-, with the date of default stated as 10.07.2025. The Corporate Debtor disputed the petition, referring to discrepancies in the date of default and amounts reflected in different documents, a credit entry of Rs.14.41 lakh, the authority for the demand notice and its financial position. The Tribunal observed that these objections did not create doubt regarding the existence of financial debt or occurrence of default. It also noted that the dues were acknowledged by the Corporate Debtor and that the discounted bills were within the limitation period. The Tribunal held that the Corporate Debtor’s settlement efforts with another lender were a separate matter. CP (IB) 466 of 2025 was accordingly allowed, CIRP was initiated, Mr. Anil Kashi Drolia was appointed as IRP, and moratorium under Section 14 was ordered to follow.

Section 7 Petition for CIRP Initiation

Bank of Maharashtra filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

The Financial Creditor is constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and is engaged in banking services. Comet Granito Private Limited was stated to be incorporated under the Companies Act, 1956 and engaged in manufacturing non-structural, non-refractory ceramic ware.

The petition concerned a Bill Discounting/TReDS Financing Facility sanctioned at the request of the Corporate Debtor. TaxGuru’s existing publication explains how a financial creditor can file a CIRP application under Section 7 of the IBC.

TReDS Financing Facility and Outstanding Debt

The Financial Creditor submitted that a Bill Discounting/TReDS Financing Facility of Rs.5,00,00,000/- was sanctioned through the TReDS platform pursuant to the Sanction Letter dated 28.06.2024.

The Corporate Debtor had executed a Master Agreement with Receivables Exchange of India Limited (RXIL) on 06.05.2024, agreeing to create and accept factoring units on the RXIL platform for financing and refinancing against trade receivables.

The Financial Creditor stated that obligation reports/invoices were uploaded on the TReDS platform and accepted by the Corporate Debtor. On the basis of those invoices, bills were discounted and an aggregate amount of Rs.4,19,95,603/- was disbursed on various dates between 22.11.2024 and 10.03.2025.

The Corporate Debtor allegedly failed to repay the financed amount according to the terms of the Sanction Letter. A demand notice dated 02.08.2025 was consequently issued seeking payment of Rs.4,19,95,603/- within seven days. No payment was received.

TaxGuru has also published material explaining the TReDS (Trade Receivables Discounting System) framework and its role in financing trade receivables.

Corporate Debtor’s Objections

The Corporate Debtor denied the averments made in the petition and raised objections concerning the date of default, the outstanding amount and the demand notice.

Dispute Regarding Date and Amount of Default

The Corporate Debtor pointed out that Part IV of the application mentioned 10.07.2025 as the date of default, whereas Form D recorded the date of default as 14.07.2025.

It further submitted that the Statement of Account did not support the amount claimed as default because the principal outstanding differed from the amount stated in the application and included entries subsequent to the alleged date of default.

The Corporate Debtor also pointed out that one annexure reflected an outstanding of about Rs.4.05 crores while another mentioned Rs.4.19 crores, without reconciliation. It relied upon a credit entry of Rs.14.41 lakhs dated 19.07.2025 which, according to the Corporate Debtor, had not been accounted for in the demand notice dated 02.08.2025.

Other Objections and Settlement Efforts

The Corporate Debtor submitted that the demand notice dated 02.08.2025 was invalid as it had been issued by an Advocate without any authorisation on record from the Financial Creditor.

It also submitted that it was financially sound and well-established, had substantial turnover and ongoing business operations, and was regularly servicing its financial facilities.

In an additional affidavit, the Corporate Debtor stated that State Bank of India, as lead bank under a Multiple Banking Arrangement, was considering its request for Holding on Operations and a One-Time Settlement proposal. It also stated that a Forensic Auditor had been appointed and its bank account had remained frozen for 2-3 months, preventing financial transactions.

The Corporate Debtor further stated that it intended to repay the Financial Creditor after restoration of banking operations and referred to communications dated 15.01.2026 and 26.02.2026. By pursis dated 30.06.2026, it placed further email correspondence on record and stated that it had communicated on 25.06.2026 regarding a proposed investment and an offer to make an initial payment towards the outstanding dues.

Tribunal’s Findings on Financial Debt and Default

The Tribunal observed that the facility appeared to have been sanctioned as a stand-alone facility and not as consortium lending, although it was apparently a multiple lending facility. The Tribunal observed that the debt had arisen out of the TReDS facility, which was a bill discounting facility on a transparent platform based on a separate agreement between the Applicant lender and the Corporate Debtor.

The Tribunal considered the Corporate Debtor’s objections concerning the discrepancy in the date of default, variation in outstanding amounts, non-adjustment of the Rs.14.41 lakh credit entry and alleged invalidity of the demand notice issued through an Advocate.

It found that these objections did not create any doubt regarding the existence of the financial debt or the occurrence of default. The Tribunal further observed that the amount of dues was acknowledged by the Corporate Debtor and that the discounted bills were within the period of limitation for filing the application.

The Tribunal accordingly concluded that the amount of debt and its due were established.

Effect of Settlement Discussions with Another Lender

The Corporate Debtor relied upon its efforts to obtain a settlement with State Bank of India, including the Holding on Operations request and OTS proposal.

The Tribunal observed that the Corporate Debtor’s settlement efforts with SBI were a different matter because the Applicant was not a consortium lender, even though another major lender was involved in the multiple lending facility.

Initiation of CIRP

Having considered the material on record and the submissions of both parties, the Tribunal allowed CP (IB) 466 of 2025.

The Tribunal ordered initiation of the Corporate Insolvency Resolution Process against Comet Granito Private Limited.

Appointment of Interim Resolution Professional

The Tribunal appointed Mr. Anil Kashi Drolia, having IBBI Registration No. IBBI/IPA-001/IPP-02327/2020-2021/13482, as Interim Resolution Professional.

The IRP was directed to take charge of the Corporate Debtor’s management immediately and make the public announcement prescribed under Section 15 of the IBC within three days from receipt of the order. The IRP was also directed to call for submission of claims by creditors in the manner prescribed under Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Deposit Towards CIRP Expenses

The Financial Creditor was directed to deposit Rs.2.00 lacs with the IRP towards expenses for performing the functions assigned under the applicable regulations.

The amount was to be deposited within one week from receipt of the order by the Financial Creditor. The Tribunal directed that the amount would be subject to adjustment by the Committee of Creditors, as accounted for by the IRP, and would be paid back to the Financial Creditor.

Moratorium Under Section 14

As a consequence of admission of the petition under Section 7(5) of the IBC, the Tribunal directed that the moratorium contemplated under Section 14(1) would follow in relation to the Corporate Debtor, prohibiting the actions specified in clauses (a) to (d) of Section 14(1).

The Tribunal further recorded that Sections 14(2) to 14(4) would remain in force during the moratorium period.

Final Order

The Tribunal allowed CP (IB) 466 of 2025 and initiated CIRP against Comet Granito Private Limited.

Mr. Anil Kashi Drolia was appointed as IRP, with directions to take immediate charge of management and undertake the statutory steps concerning public announcement and claims. The Financial Creditor was directed to deposit Rs.2.00 lacs towards CIRP expenses, and the statutory moratorium under Section 14 was directed to follow.

The Registry was directed to communicate the order to the Applicant, IRP and Corporate Debtor and forward a copy to the IBBI.

FULL TEXT OF THE NCLT JUDGMENT/ORDER

This petition has been filed under Section 7 of the Insolvency and Bankruptcy code, 2016 (“IBC”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Bank of Maharashtra, (hereinafter referred to as ‘Financial Creditor’) seeking initiation Corporate Insolvency Resolution Process against Comet Granito Private Limited (hereinafter referred to as ‘Corporate Debtor).

2. The financial creditor is constituted under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and is engaged in the business of providing banking services. The Corporate Debtor is stated to be a company incorporated under the provisions of the Companies Act, 1956 and carrying on the business of manufacturing non-structural, non-refractory ceramic ware.

3. As per Part IV of the petition, the total outstanding debt is Rs.4,52,67,984/- out of which Rs.4,19,95,603/- towards the principal amount, Rs. 14,41,522 / – towards interest amount and penal interest Rs. 18,30,859/- as on 29.09.2025 and the Date of Default is shown as 10.07.2025. It is submitted that at the request of the corporate debtor, the petitioner sanctioned a Bill Discounting/TReDS Financing Facility of Rs. 5,00,00,000/-through the TReDS platform in terms of the Sanction Letter dated 28.06.2024. In consideration thereof, the corporate debtor executed a Master Agreement with Receivables Exchange of India Limited (RXIL) on 06.05.2024, agreeing to create and accept factoring units on the RXIL platform to facilitate financing and refinancing against its trade receivables. It is further submitted that the TReDS framework operates in terms of the guidelines issued by the Reserve Bank of India on 03.12.2014 under the Payment and Settlement Systems Act, 2007.

4. The financial creditor further submitted that obligation reports/invoices were uploaded on the TReDS platform, which were accepted and acknowledged by the corporate debtor. Based on such invoices, the financial creditor discounted the bills and disbursed an aggregate amount of Rs.4,19,95,603/- on various dates between 22.11.2024 and 10.03.2025. However, the corporate debtor failed to repay the financed amount in accordance with the terms of the Sanction Letter dated 28.06.2024, despite being liable to repay the discounted bills together with the applicable interest and other charges. It is further submitted that despite repeated follow-up by the financial creditor, the corporate debtor did not regularise the account or discharge its repayment obligations. Consequently, the financial creditor issued a demand notice dated 02.08.2025, calling upon the corporate debtor to clear the outstanding amount of Rs.4,19,95,603/- within seven days from the date of receipt of the notice. However, no payment was received from the Corporate Debtor.

5. It is further submitted that the corporate debtor lacks the capacity to settle the outstanding dues and the default is evidenced by Statement of Account certified under Section 4 read with Section 2(8) of Bankers’ Books Evidence Act, 1891, which records the outstanding liability of the Corporate Debtor.

6. The financial creditor has proposed the name of Insolvency Professional, Mr. Anil Kashi Drolia having IBBI Registration No.: IBBI/IPA-001/IPP-02327/2020-2021/13482 to act as a Resolution Professional and also produced the written consent of the RP.

7. The Respondent/ Corporate Debtor has filed its reply and denied the averments made in the petition. It is submitted that the petitioner failed to disclose a clear and definite date of default as part IV of the application mentions 10.07.2025, whereas Form D annexed as Exhibit “M” records the date of default as 14.07.2025. It is further submitted that the Statement of Account (Exhibit “J”) does not support the amount claimed in default, as the principal outstanding reflected therein differs from the amount claimed in the application and contains entries subsequent to the alleged date of default. The Corporate Debtor also points out that Annexure “J” reflects an outstanding of about Rs.4.05 crores, whereas Annexure “K” mentions Rs.4.19 crores, without any reconciliation, and that a credit entry of Rs. 14.41 lakhs dated 19.07.2025 has not been accounted for in the demand notice dated 02.08.2025, resulting in an inflated claim. It is further submitted that the demand notice dated 02.08.2025 is invalid as the same was issued by an Advocate without any authorisation on record from the petitioner. The Corporate Debtor also submits that it is a financially sound and well-established company with substantial turnover, ongoing business operations, and regular servicing of its financial facilities.

8. The corporate debtor has filed an additional affidavit stating that State Bank of India, being the lead bank under the Multiple Banking Arrangement, is considering its request for Holding on Operations and a One-Time Settlement (OTS) proposal. It is submitted that a Forensic Auditor has been appointed, due to which the Corporate Debtor’s bank account has been frozen for 2-3 months, preventing financial transactions. The corporate debtor further submits that it intends to repay the petitioner upon restoration of banking operations, which was communicated by email dated 15.01.2026 and the petitioner was also informed of the Holding on Operations request, the OTS proposal, and the proposed payment plan by communication dated 26.02.2026. The corporate debtor has further filed a pursis dated 30.06.2026 placing on record the email correspondence between the petitioner and the corporate debtor and stated that the corporate debtor informed the petitioner vide email dated 25.06.2026 about a proposed investment and its offer to make an initial payment towards the outstanding dues, which was acknowledged by the petitioner, who sought supporting documents regarding the investment, investor, source of funds, and payment timeline. It is stated that the Corporate Debtor is in the process of furnishing the requisite documents.

9. Both the parties have filed their written submissions and relied upon certain judgements.

10. Heard both the parties and perused the material placed on record.

11. Observations 85 findings:

a. The applicant appears to have sanctioned the facility as a stand-alone facility and not as a consortium lending, but apparently is a multiple lending facility. All that would be required is to inform the other lenders for their no objection. The debt has arisen out of TReDs facility which is a bill discounting facility on a transparent platform based on a separate agreement between the applicant lender and the respondent CD.

b. The Corporate Debtor has mainly contended that there is a discrepancy regarding the date of default, variation in the outstanding amount reflected in different annexures, non-adjustment of a credit entry of Rs.14.41 lakh and invalidity of the demand notice issued through an Advocate. These objections do not create any doubt regarding the existence of the financial debt or the occurrence of default. The amount of dues are also acknowledged by the Corporate debtor in its additional affidavit and the bills discounted are within the period of limitation for filing this application.

c. The amount of debt and its due is established. The respondent’s contention that it is trying for a settlement with another lender SBI is a different matter as this is not a consortium lender, even if in multiple lending facility there is another major lender from whom the applicant has availed the facility/ies.

d. In view of the above, we pass the following orders:

ORDER

i. CP (IB) 466 of 2025 is allowed.

ii. The CIRP is ordered to be initiated against the corporate debtor – Comet Granito Private Limited.

iii. We hereby appoint Mr. Anil Kashi Drolia having IBBI Registration No.: IBBI/IPA-001/IPP-02327/ 2020- 2021/13482, email id- [email protected] to act as IRP. The IRP is directed to take charge of the Corporate Debtor’s management immediately. The IRP is also directed to cause public announcement as prescribed under Section 15 of the IBC, 2016 within three days from the date the copy of this order is received, and call for submissions of claim by the creditors in the manner as prescribed under Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

iv. We direct the Applicant/Financial Creditor to deposit a sum of Rs. 2.00 lacs (Rupees two lacs only) with the IRP to meet the expenses for performing functions assigned to him in accordance with regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within one week from the date of receipt of this order by the Financial Creditor. The amount, however, be subject to adjustment by the Committee of Creditors, as accounted for by IRP and shall be paid back to the Financial Creditor.

v. As a consequence of the petition being admitted in terms of Section 7(5) of IBC, 2016, moratorium as envisaged under the provisions of Section 14 (1) shall follow in relation to the Corporate Debtor, prohibiting actions as per clauses (a) to (d) of Section 14 (1) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(4) of the Code shall remain in force.

vi. The Registry is directed to communicate this order to the applicant, IRP and the corporate debtor. In addition, a copy of the order shall also be forwarded to IBBI.