NCLT admits insolvency plea against Shah Builders
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Synopsis
Canara Bank had moved the bankruptcy court against the developer in 2020 following its default on loans worth nearly ₹100 crore including interest thereon. The account was declared a non-performing (NPA) in December 2016. The tribunal has appointed Srigini Rajat Naidu as the resolution professional to undertake insolvency proceedings against the developer.
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The National Company Law Tribunal (NCLT) has admitted Canara Bank's application to initiate the corporate insolvency resolution process (CIRP) against Mumbai-based real estate developer Shah Group Builders.
The developer had initially availed of loans worth ₹135 crore from the Central Bank of India and ₹90 crore from Reliance Capital. The company executed a mortgage deed of a 3.5-acre land parcel in Navi Mumbai's Kharghar with a building to be constructed on it.
Out of ₹135 crore granted by the Central Bank of India, ₹60 crore of loan was taken over by Canara Bank. The two lenders executed an inter-se agreement specifying that Central Bank granted ₹75 crore and Canara Bank extended ₹60 crore as loans to the developer.
Shah Group Builders admitted the debt through acknowledgement letters but raised objections regarding multiple parties and the authorisation of the application.
The developer argued that Canara Bank did not give due breakup of the amount claimed and that there was inconsistency between the amount claimed and the accounts produced. It also claimed the bank has failed to produce the complete statement of account as required under the provisions of the bankruptcy code.
After hearing both sides, the NCLT bench found the debt and default established and dismissed the developer's objections. Consequently, the financial creditor's petition to initiate insolvency proceedings against the developer under Section 7 of the Insolvency and Bankruptcy Code was admitted. This is a key legal victory for Canara Bank and marks a crucial step in the ongoing resolution process involving Shah Group Builders
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The bank had moved the bankruptcy court against the developer in 2020 following its default on loans worth nearly ₹100 crore including interest thereon. The account was declared a non-performing (NPA) in December 2016. The tribunal has appointed Srigini Rajat Naidu as the resolution professional to undertake insolvency proceedings against the developer.The developer had initially availed of loans worth ₹135 crore from the Central Bank of India and ₹90 crore from Reliance Capital. The company executed a mortgage deed of a 3.5-acre land parcel in Navi Mumbai's Kharghar with a building to be constructed on it.
Out of ₹135 crore granted by the Central Bank of India, ₹60 crore of loan was taken over by Canara Bank. The two lenders executed an inter-se agreement specifying that Central Bank granted ₹75 crore and Canara Bank extended ₹60 crore as loans to the developer.
Shah Group Builders admitted the debt through acknowledgement letters but raised objections regarding multiple parties and the authorisation of the application.
The developer argued that Canara Bank did not give due breakup of the amount claimed and that there was inconsistency between the amount claimed and the accounts produced. It also claimed the bank has failed to produce the complete statement of account as required under the provisions of the bankruptcy code.
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After hearing both sides, the NCLT bench found the debt and default established and dismissed the developer's objections. Consequently, the financial creditor's petition to initiate insolvency proceedings against the developer under Section 7 of the Insolvency and Bankruptcy Code was admitted. This is a key legal victory for Canara Bank and marks a crucial step in the ongoing resolution process involving Shah Group Builders
(You can now subscribe to our Economic Times WhatsApp channel)
