Avendus Finance Private Limited Vs Acute Retail Infra Private Limited (NCLT Mumbai)
An Officer Authorised To Grant Loan Is Also Authorised To File Application Under Section 7 of IBC, 2016: NCLT Mumbai
NCLT Mumbai admitted Avendus Finance Pvt. Ltd.’s petition under Section 7 of the IBC against Acute Retail Infra Pvt. Ltd. for default on a ₹65.13 crore financial debt arising from a 2018 facility agreement, later amended in 2019 and 2020 as part of an RBI-approved one-time restructuring. Avendus, part of a lender consortium, had advanced ₹66 crore secured by hypothecation deeds, share pledges, personal guarantees, and an escrow arrangement tied to lease rentals from Future Retail Ltd. The corporate debtor defaulted on repayments from April 2022, failed to create a mortgage over its Durgapur property as covenanted, and breached multiple facility terms. It admitted the debt and default but cited COVID-19 disruptions and ongoing asset monetization efforts. It also objected that the petition lacked proper board authorization. The tribunal, relying on Supreme Court precedents (Rajendra Narottamdas Sheth; Innoventive Industries), held that an officer empowered to sanction loans may initiate CIRP and that general board authorization suffices; in any case, a specific 17 May 2024 resolution existed. It found ample documentary proof of debt and default, no pre-existing dispute, and compliance with Section 4 IBC threshold. The debtor’s defenses, including COVID impact and settlement talks, did not negate default. The NCLT emphasized that once default is established and the application is complete, admission is mandatory. Consequently, the petition was admitted, initiating CIRP against the corporate debtor. The order underscores that procedural objections on authorization cannot defeat a valid Section 7 claim when substantive requirements are met and default is undisputed.
