JM Financial Credit Solutions Limited Vs R.M. Bhuther And Company Limited (NCLT Mumbai)
Conclusion: Corporate Debtor had defaulted in repayment of financial debt to the Applicant and such default was well over the minimum threshold of Rs. 1 crore, as prescribed u/s 4 of the Code. The application filed u/s 7 of the Code was complete and there were no disciplinary proceedings pending against the proposed resolution professional. Therefore, applying the law laid down by the Hon’ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank, the instant application deserved to be admitted u/s 7(5)(a) of the Code.
Held: JM Financial Credit Solutions Limited (“Financial Creditor”) filed the present application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against M. Bhuther and Company Limited (“Corporate Debtor”), seeking initiation of CIRP, appointment of an IRP and declaration of moratorium. The petition was based on six loan facilities sanctioned between 2017–2022, aggregating to INR 288.20 crores, disbursed to HEM Bhattad AOP, of which the Corporate Debtor was a member. The facilities were secured by unconditional and irrevocable corporate guarantees executed by the Corporate Debtor. Upon defaults in repayment, the loan accounts were classified as NPA on 01.05.2023. Consequently, the guarantees were invoked through demand notices, making the default date 17.08.2023. As on the filing date (19.02.2025), the total outstanding was INR 332.80 crores. The Corporate Debtor opposed the petition on multiple grounds: (i) absence of certain loan documents, (ii) bar of res judicata owing to earlier petitions filed in 2021 and 2024, (iii) suppression of facts, (iv) limitation, and (v) mala fide intent of the Financial Creditor. The Financial Creditor rebutted that the debt and default stood established through loan agreements, corporate guarantees, disbursement proofs, and demand notices; the 2021 petition was settled and withdrawn, while the 2024 petition was withdrawn to rectify defects and did not bar a fresh filing. The default invoked on 17.08.2023 was within limitation, and the petition was maintainable. It was noted that Tribunal found that execution and invocation of the corporate guarantees were undisputed, and no material was produced by the Corporate Debtor to establish discharge of liability. The plea of res judicata was rejected as the previous petitions were either settled or withdrawn without adjudication on merits. It was also held that the petition was within limitation, the debt and default are established, and the application was maintainable.
