Axis Bank Vs Millenium Starch India Pvt Ltd (NCLT Bengaluru)
The National Company Law Tribunal admitted a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by Axis Bank against Millennium Starch India Pvt. Ltd. and initiated Corporate Insolvency Resolution Process (CIRP) after finding existence of financial debt and default. The Financial Creditor stated that the Corporate Debtor had availed credit facilities aggregating ₹40 crore under a Multiple Banking Arrangement dated 19.05.2022 comprising an Open Cash Credit Facility of ₹25 crore and a Term Loan Facility of ₹15 crore. Various loan and security documents including loan agreements, hypothecation deeds, guarantees, pledge documents, and memorandum of deposit of title deeds were executed. The Financial Creditor alleged that the Corporate Debtor defaulted in servicing interest and repayment obligations from 28.02.2024 and the account was classified as Non-Performing Asset (NPA) on 31.05.2024. Loan recall notices and notices under Section 13(2) of the SARFAESI Act were issued but the outstanding dues remained unpaid. The Financial Creditor claimed a default amount of ₹39.19 crore.
The Corporate Debtor opposed admission of the petition contending that the proceedings were initiated as a recovery mechanism and not for genuine insolvency resolution. It argued that the petition suffered from procedural defects including non-compliance with Rule 4(3) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, defects in certificates issued under the Bankers’ Books Evidence Act, absence of proper Board Resolution authorizing initiation of proceedings, and non-filing of complete NeSL reports for all loan accounts. The Corporate Debtor also claimed that it had made substantial repayments of ₹3.58 crore, remained solvent and financially viable, and relied on the Supreme Court judgment in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. to argue that the Tribunal possessed discretion under Section 7(5)(a) of the Code to reject the petition despite existence of debt and default.
