Shriram Finance Limited Vs Bafna Motors Ratnagiri Private Limited (NCLT Mumbai)
Conclusion: Since debt exceeded threshold of ₹1 crore under Section 4 of the Code and evidence was placed on record such as sanction letter, loan agreement, account statement, demand notice, IU record which demonstrated all pre-requisites of Section 7(5)(a) of the Code were fulfilled and, accordingly, the instant Application was fit for admission under Section 7 of the Code.
Held: In the instant case, a Financial Creditor was an NBFC engaged in the business of providing finance to a wide range of customers including small and medium enterprises. The Corporate Debtor carried on the business as a dealer and manufacturer in automobiles, automobile spare parts and components etc. The Corporate Debtor availed a loan for Rs.5,00,00,000/- (Five Crore Rupees) from Shriram City Union Finance Limited (hereinafter referred to as “the Original Lender”) vide Loan Agreement dated 27.03.2018 which was repayable in 60 monthly instalments. However, the Corporate Debtor defaulted in the payment of monthly instalments. The total amount claimed to be in default was Rs.6,17,15,056/- (Six Crore Seventeen Lakh Fifteen Thousand and Fifty-Six Rupees). The date of default as mentioned in Part-IV of the Application was 27.09.2021. Since the Corporate Debtor defaulted in payment of its outstanding dues, the Financial Creditor prayed that CIRP might be initiated in respect of the Corporate Debtor under Section 7 of the Code. Reliance was placed on Innoventive Industries Ltd. v. ICICI Bank (2018) SCC 407 that occurrence of default was sufficient for admission. It was held that financial creditor in the present case has placed on record necessary evidence such as the Sanction Letter dated 27.03.2018 and the Loan Agreement dated 27.03.2018 to demonstrate the existence of financial debt exceeding the minimum threshold of Rs.1 Crore prescribed under Section 4 of the Code which was due and payable by the Corporate Debtor at the rate of 14% p.a. interest over a period of 60 months. It was observed from the record that the default in repayment of interest was committed by the Corporate Debtor. This led the Original Lender to issue Demand Notice inter alia calling upon the Corporate Debtor to immediately pay the total outstanding amount of Rs.6,17,15,056/- including interest. All pre-requisites of Section 7(5)(a) of the Code were fulfilled and, accordingly, the instant Application was fit for admission under Section 7 of the Code.
