Bank Of Maharashtra vs Sawant Logistic Services Private Limited

[PER: CORAM]

This is an Application bearing C.P. (IB) No.175/MB/2025 filed on 10.09.2024 by Bank of Maharashtra, the Applicant (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as “the AAA Rules”) through Mr. Anup Kumar Singh, Authorised Officer and Chief Manager (ARC) for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Sawant Logistic Services Private Limited, the Corporate Debtor.

The Applicant had granted Cash Credit limit of Rs.2.00 Crore (Enhancement from earlier limit of Rs. 1.00 Crores) to the Corporate Debtor vide Sanction Letter dated 28.12.2012.

The total amount claimed to be in default against the Corporate Debtor as per Part-IV of the Application is Rs.4,05,55,441.53/- (Four Crore Five Lakh Fifty-Five Thousand Four Hundred and Forty-One Rupees and Fifty-Three Paisa) inclusive of principal amount, interest and penal interest as on 17.08.2024 and the date of default mentioned is 90 days prior to NPA classification i.e. on 08.02.2018 (Account slipped into NPA on 09.05.2018). The Corporate Debtor having failed to repay the outstanding dues owed to the Applicant, the latter has filed the present Application seeking initiation of CIRP in respect of the former under Section 7 of the Code.

At the request of the Applicant, this Tribunal vide order dated 11.03.2025 had directed the Applicant to carry out paper publication. The same was complied with by the Applicant by making the publication in two widely circulated newspapers i.e. in “Indian Express” and another in “Loksatta” as the Corporate Debtor’s registered address is in Ahmednagar, which is noted in the order dated 03.04.2025. In spite of the notice, none appeared on behalf of the Corporate Debtor nor there was any reply from the Corporate Debtor and therefore the right of the Corporate Debtor to file reply was closed on 03.04.2025. This Tribunal vide order dated 08.04.2025 set the Corporate Debtor ex-parte and on the said date, the Ld. Counsel for the Applicant was heard and the order was reserved.

The Applicant had sanctioned Cash Credit limit of Rs. 2.00 Crores (Enhancement from earlier limit of Rs. 1.00 Crores) vide Sanction Letter dated 28.12.2012 to the Corporate Debtor.

The Corporate Debtor defaulted in payment of the outstanding amount on 08.02.2018 and consequently after 90 days, the account slipped into NPA on 09.05.2018.

The Corporate Debtor had defaulted in payment of its dues. Therefore, the Applicant issued a Demand Notice dated 07.06.2018 under Section 13(2) of the SARFAESI Act, 2002, whereby the Corporate Debtor was called upon to repay the outstanding dues owed to the Applicant within 60 days from receipt of the notice, however the Corporate Debtor neglected to respond to the said Notice, or to clear the outstanding amount.

The Applicant filed OA/528/2020 against the Corporate Debtor on 19.08.2020 under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, which is pending before the Hon'ble Debts Recovery Tribunal, Aurangabad.

The Applicant declared that the Application falls within the limitation period as the Corporate Debtor had provided numerous acknowledgements from time to time. The following is the table showing the liability acknowledgment by the Corporate Debtor in its financial statements:

Hence, the instant Application under Section 7 of the Code was filed by the Applicant seeking for initiation of CIRP Process against the Corporate Debtor.

The date of default is stated as 08.02.2018 being the date which falls 90 days prior to the date of NPA.

We have heard the counsel of the Applicant and have perused the records. The observations of the Tribunal in regard to the Application are as under: -

The Applicant had granted Cash Credit Facility of Rs. 2 Crore Crores (Enhancement from earlier limit of Rs. 1.00 Crores) to the Corporate Debtor vide Sanction Letter dated 28.12.2012. The same was acknowledged by the Corporate Debtor through a “Request Letter for making Credit Facility available” dated 03.01.2013 to the Applicant. Thereafter, the Corporate Debtor had promised to pay to the Applicant the principal amount and interest thereon at base rate plus 3.50% i.e. 14% p.a. and penal interest etc. as may be fixed by the Applicant, through a ‘Demand Promissory Note’ dated 03.01.2013. The Corporate Debtor has also executed a notarised and Registered Affidavit dated 31.12.2012 along with Letter of Occurrence dated 03.01.2013 confirming the disbursal of the amount. Therefore, there has been a disbursement of the amount of debt from the Applicant to the Corporate Debtor.

Further, we find that the Corporate Debtor has given ‘Balance and Security Confirmation Letter’ dated 15.12.2014 and 10.12.2017 acknowledging the debt and securities in respect of the dues. Thereafter, the Applicant issued a Demand Notice under Section 13 of the SARFAESI Act, 2002 dated 07.06.2018 calling upon the Corporate Debtor to repay an aggregate amount of Rs. 1,84,66,579/-along with interest at 13% p.a. and penal interest, within 60 days from receipt of the said notice. The Corporate Debtor had not responded to this notice.

The Applicant has annexed Statement of Account bearing Account No. 60088348801 and the same is confirmed by the Certificate under Section 2A(a) of the Banker’s Book of Evidence Act, 1891 dated 17.08.2024. The Statement of Accounts are from 01.04.2015 to 31.03.2019. The NeSL record of default in Form D dated 23.02.2024 confirming the status of default as “authenticated” is also attached by the Applicant in the Application.

Relevant pages of the Financial Statements of the Corporate Debtor for the Financial Year (FY) 2018-2019, 2020-21, 2021-22 and 2022-23 have also been attached. These statements show that the Corporate Debtor has borrowed money from the Applicant, which is reflected under the head ‘Short-Term Borrowings’. The date of default mentioned in Part-IV of the Application is 08.02.2018, and therefore, the limitation period for the same expires at the expiry of 3 years i.e. on 07.02.2021. But the Financial Statements produced are for the FY 2018-2019, 2020-21, 2021-22 and 2022-23 and the said Financial Statements clearly acknowledge the debt of the Applicant Bank. Thus, the Application filed is within the limitation period as these statements contain an acknowledgment of the debt due and payable by the Corporate Debtor.

On perusal on the latest Balance Sheet for FY-2022-23 of the Corporate Debtor, we find that the Corporate Debtor acknowledged an amount of Rs.1,74,649.75/-under ‘Current Liabilities’ as Short-Term Borrowings which shows that an amount of more than Rs.1 Crore is outstanding payable by the Corporate Debtor. On perusal of the Independent Auditor’s Report for the year ended on 31.03.2023, it is seen that the Ld. Auditor of the Corporate Debtor has stated that “….the company has not defaulted in repayment of dues to a financial institution, bank or debenture holders, except……(c) Cash credit secured against book debts from Bank of Maharashtra has become NPA outstanding in the books of accounts is Rs.1.74 Crores” which substantiates the debt and default by the Corporate Debtor.

In view of aforesaid discussions, it is clear that the Applicant has placed on record necessary evidences and materials to demonstrate the existence of the financial debt exceeding the minimum threshold of Rs.1 Crore prescribed under Section 4 of the Code due and payable by the Corporate Debtor as well as the default in repayment thereof by the Corporate Debtor.

The Applicant has the proposed Interim Resolution Professional (IRP) in compliance with Section 7(3)(b) of the Code. It has proposed the name of Mr. Anil Kashi Drolia, a registered Insolvency Professional as the Interim Resolution Professional (IRP) to carry out the functions as mentioned under the Code. The Applicant has provided his valid AFA in Form B valid till 30.06.2025 and has also given his consent and also the declaration in Form 2, inter alia, stating that no disciplinary proceeding is pending against him.

We find that all pre-requisites of Section 7(5)(a) of the Code are fulfilled and, accordingly, we are satisfied that the instant Application is fit for admission under Section 7 of the Code.

In view of the aforesaid findings, Application bearing C.P.(IB) No. 175/MB/2025 filed under Section 7 of the Code by Bank of Maharashtra, the Financial Creditor, for initiating CIRP in respect of Sawant Logistic Services Pvt. Ltd, the Corporate Debtor is hereby admitted.

We further declare moratorium under Section 14 of the Code with consequential directions as mentioned below: -