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Judgment
ORDER
The case is fixed for pronouncement of the order. The order is pronounced in open Court vide separate sheet.
This Company Petition has been filed by HDFC Bank Limited (“Financial Creditor”), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Shri Bhagwati Agro Industries private limited (“Corporate Debtor”) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for having committed a default in payment of its financial debts amounting Rs. 10,44,03,044.07 ( Rupees Ten crores Forty Four Lakhs Three Thousand Forty Four and Zero Seven paisa only) as on 31.12.2024.
Perusal of Part-I of the Form-1 indicates that the Financial Creditor is HDFC Bank Limited. The registered office of the Financial Creditor is situated at HDFC Bank House, Senapati Bapat Marg, Lower Parel (west) Mumbai-400013.
Perusal of Part-II of the Form-1 indicates that the Corporate Debtor is one Shri Bhagwati Agro Industries Private Limited having CIN No. U01403MP2014PTC032572. The registered office of the Corporate Debtor is situated at E-56 Raj Plaza, Chawani, Indore Madhya Pradesh, India, – 452001.
Perusal of Part-III of the Form-1 indicates that the applicant has nominated Ms.
Teena Saraswat Pandey, Insolvency Professional, having Registration No. IBBI/IPA-001/IP-P00652/2017-18/11126, Email ID:[email protected], to act as Interim Resolution Professional (“IRP”). The proposed IRP has given written communication as per the requirement of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,2016 (Annexure-A2). That the proposed interim resolution professional has a vaild AFA, having AFA certificate no. AA1/11126/02/311225/107286, and is valid upto 31-Dec-25.
Perusal of Part-IV of the Form-1 reveals that the total amount in default is claimed to be Rs.10,44,03,044.07 /- including interest of 18% p.a.
It is stated that the respondent has applied for financial assistance from the Applicant/Financial Creditor to meet the working capital requirement for the procurement, processing and packaging of edible oil i.e. Soya, Palm, Crude, Degummed soya, crude oil(CPO), Ground Nut, Mustard Oil and other commodities in the business of corporate debtor.
The corporate Debtor has been sanctioned with various financial facilities by the Financial Creditor, time and again at the requests of the corporate Debtor. The details of sanctions done time and again are as under:
Sanction letter dated 05.02.2016:
Cash Credit of INR 1 Crore Term Loan of INR 45 Lakhs
sanction letter dated 14.07.2016:
Cash credit of INR 1 crore 50 lakhs Term loan of INR 45 lakhs
sanction letter dated 11.08.2017:
Cash credit of INR 1 crore 90 lakhs Working capital term loan of INR 45 lakhs
Sanction letter dated 13.12.2018:
Cash credit of INR 3 crores 10 Lakhs BBG- working capital term loan of INR 45 lakhs
Sanction letter dated 31.03.2020:
Cash credit of INR 3 crores 10 Lakhs Working capital term loan of INR 45 lakhs Adhoc cash credit of INR 30 lakhs
Sanction letter dated 17.07.2021 Cash Credit of INR 5 crores 50 lakhs BBG- working capital term loan of INR 45 lakhs
Sanction letter dated 10.08.2022:
Cash credit INR 9 crores Corporate card of Limit of INR 10 lakhs Corporate card of limit of INR 10 lakhs
Sanction letter dated 23.08.2023:
Cash credit of INR 9 crores Corporation card of limit of INR 10 lakhs BBG-working capital Term loan- Guaranteed Emergency Credit Line of INR 31,38,715/- BBG- working Capital Term loan- Guaranteed Emergency Credit Line of INR 21,71,000/-
Lastly, the Financial creditor vide sanction letter bearing Reference No. 88334366 dated 23rd August 2023 sanctioned the the Credit facility of amount of INR 9,73,09,715/-(Rupees Nine Crores Seventy-Three Lakhs Nine Thousand Seven Hundred and Fifteen only) plus applicable interests/other charges as per the agreed sanction terms mentioned under the said sanction letter, which has been defaulted by the Corporate Debtor. The facility has been given in the following manner:
Corporate Debtor had requested the Financial Creditor and was sanctioned the said credit facility in nature of Cash Credit (CC) Limit of INR 9,00,00,000/- (Rupees Nine Crores only), Guaranteed Emergency Credit line (GECL) Limit of INR 31,38,715/-, Guaranteed Emergency Credit Lime- Extension (GECL- EXTN) of INR 21,71,000/-, and two corporate cards with the credit Limit of INR 10,00,000/- each .
The said facilities were obtained by the borrower by executing the requisite financial facility and security documents.
(c)
The Corporate Debtor failed to pay the dues on the respective due dates of the various facilities. In view of the persistent default, the account of the Borrower has become irregular on dated 28.07.2024 and finally classified as a Non-Performing Asset "NPA" in the books of the Bank in terms of the guidelines issued by the Reserve Bank of India from time to time. As per part IV of form 1, the date of default is 28.07.2024.
The copy of the e-mail dated 25.04.2025 of respondent proposing One-time settlement (OTS) for settling the outstanding dues, which marks an acknowledgment of debt after the instant petition was filed by the applicant, is attached herewith and marked as ANNEXURE-A1.
The copy of bank account statement of the corporate debtor with the applicant financial creditor from the date of filing the petition until the date of the affidavit i.e 01/04/24 to 31/08/25 is filed through additional affidavit and annexed here as ANNEXURE-A3
The Applicant issued a notice dated 13.12.2024(Annexure-A4) under section 13(2) if the SARFAESI Act, 2002 demanding repayment of an amount of Rs. 10,44,03,044.07 /- including interest. However, the respondent failed to adhere to the repeated demands made by the applicant.
It is observed that the certificate of NESL i.e. Form-D dated 08.11.2024 is placed on record indicating a default date of 28.07.2024, with the status marked as ‘AUTHENTICATED’ thus affirming the occurrence of default.
The Applicant/Financial Creditor has relied upon the following documents:
I. Sanction letters & Hypothecation Deed (Annexure-A3)
II. OTS (through Additional Affidavit Annexure A1)
III. Recall Notice under section 13(2) if the SARFAESI Act, 2002(Annexure-A5)
IV. Copy of statement of the financial creditor showing disbursement, part repayments and accrual of interests in respect of the Corporate Debtor. (Annexure-A4)
V. Default available with Information Utility(Annexure-A6)
Certified true copy of the resolution passed by the board of directors of HDFC bank limited at the meeting held on July 28, 2023 is on page 216 of the petition.
Thus as per the terms and conditions of the said financial facility the corporate Debtor had to pay the dues in discharge of its obligation. The corporate debtor was irregular in the payment and committed default in payment. Despite various demand notice/reminder letters, the corporate debtor had not made any efforts to make payments of the dues on the respective due dates. Therefore, the said debt has remained due, defaulted and payable since then. The application filed under section 7 of IBC,2016 r.w. rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of corporate Insolvency Resolution Process of the corporate Debtor and the present case is fit to initiate CIRP of the corporate Debtor.
AFFIDAVIT IN REPLY BY THE RESPONDENT:
The deponent has given a substantive reply addressing the applicant’s claims and arguments without responding paragraph-wise. No statement should be treated as admitted unless expressly accepted. The Board Resolution authorizing the present deponent is attached as Annexure-A.
The application lacks necessary documentation. Although the applicant claims to have extended and disbursed credit facilities to the corporate debtor, it has not provided proof of such disbursals or submitted supporting documents like loan agreements or account statements.
The applicant relies on sanction letters, including one dated 10.08.2022, to prove the debt. However, these facilities were valid only until 15.06.2023, and no evidence shows their continuation thereafter. The claimed cash credit of INR 900 lakhs was valid up to 15.06.2023, with no default alleged or shown. Hence, there was no default during the validity period, making the application ineligible under the Insolvency and Bankruptcy Code.
The applicant has not provided proof for the GECL and GECL-Extension facilities. It claims a default of INR 58.13 lakhs based on the section 13(2) notice, but this amount is below the minimum threshold of INR 1 crore required under section 4(1) of the IBC, 2016. Hence, the application is not maintainable.
Even if the applicant’s claims are accepted, it has not shown proof of default by the corporate debtor. Issuance of a notice alone does not establish default. The applicant should have provided records evidencing non-payment. Hence, the application should be rejected for lack of supporting documents and merit.
Analysis and Observation:
We have heard the counsel for the applicant and have perused the records. The Observations of the Tribunal are follow as under: -
This is a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by HDFC Bank Limited (“Financial Creditor”) seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Shri Bhagwati Agro Industries Private Limited (“Corporate Debtor”) for default in repayment of a financial debt amounting to Rs. 10,44,03,044.07 as on 31.12.2024.
The brief facts, as stated by the Financial Creditor, are that various credit facilities were extended to the Corporate Debtor from time to time for meeting working capital requirements in relation to procurement, processing and packaging of edible oil and other commodities. The sanction letters issued by the Financial Creditor from 2016 to 2023 detail cash credit, term loan, working capital term loans, and Guaranteed Emergency Credit Line (GECL) facilities amounting to an aggregate sanctioned limit of Rs. 9,73,09,715/-, including two corporate card limits of Rs. 10,00,000 each.
It is further stated that the account of the Corporate Debtor was classified as Non-Performing Asset on 28.07.2024 owing to persistent default. A demand notice dated 13.12.2024 under Section 13(2) of the SARFAESI Act, 2002 was issued by the Financial Creditor demanding repayment of Rs. 10,44,03,044.07, which remained unpaid. Subsequently, the petition under Section 7 was filed. The Financial Creditor has also relied upon the acknowledgment of debt through the OTS proposal dated 25.04.2025 and confirmation of default through the Information Utility – National E-Governance Services Limited (NESL) record in form D, dated 8.11.2024.
The Corporate Debtor, in its affidavit in reply, contests the maintainability of the petition. It is contended that the applicant has not filed supporting loan documentation or conclusive proof of disbursals. It is further submitted that the sanction facilities were valid only until 15.06.2023 and the Financial Creditor has not demonstrated continuing liability thereafter. The Corporate Debtor has also argued that the claimant has failed to prove a default above the statutory threshold of one crore rupees under Section 4(1) of the Code.
The Financial Creditor, on the other hand, has placed on record a certificate from the Information Utility showing the acknowledgment of debt by the Corporate Debtor. As per the settled position of law under Section 7 read with Section 3(12) of the Code, existence of a debt and occurrence of default are sufficient conditions for admission of the petition. The NESL Form-D record, read with the OTS proposal dated 25.04.2025, constitutes acknowledgment of liability by the Corporate Debtor within the meaning of Section 18 of the Limitation Act, 1963.
The Corporate Debtor’s plea that the documentation is insufficient is not tenable in light of the evidence of the default certified by the Information Utility (Annexure-A6) and the SARFAESI recall notice (Annexure-A5). The Code does not mandate production of loan agreement originals where the debt and default stand established from statutory sources such as the Information Utility.
The amount of default as evidenced is Rs. 10,44,03,044.07, which exceeds the minimum threshold prescribed under Section 4(1) of the Code. The petition, therefore, satisfies all requirements of Section 7(3) read with Rule 4 of the Adjudicating Authority Rules, 2016.
The application is complete in all respects and the proposed Interim Resolution Professional, Ms. Teena Saraswat Pandey (IBBI/IPA-001/IP-P00652/2017-18/11126), has submitted her written communication in Form 2, confirming her eligibility and consent to act as Interim Resolution Professional.
Upon perusal of the documents and after hearing both sides, this Adjudicating Authority finds that the debt and default committed by the Corporate Debtor are duly established. There is no material on record disproving the Financial Creditor’s claim. The petition is liable to be admitted.
Order
The petition filed by HDFC Bank Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Shri Bhagwati Agro Industries Private Limited is hereby admitted.
The Corporate Insolvency Resolution Process of Shri Bhagwati Agro Industries Private Limited is hereby initiated under Section 7(5)(a) of the Code.
Ms. Teena Saraswat Pandey, having Registration No. IBBI/IPA-001/IP-P00652/2017-18/11126, Email ID:[email protected], ,has a valid AFA, having AFA certificate no. AA1/11126/02/311225/107286, and is valid upto 31-Dec-25. is hereby appointed as Interim Resolution Professional (IRP) to carry out the functions as per Sections 17, 18, and 19 of the Code. It is further made clear that all personnel connected with the Corporate Debtor, its Promoter, or any other person associated with management of the Corporate Debtor are under legal obligation as per Section 19 of the Code to extend every assistance and co-operation to the Interim Resolution Professional. Where any personnel of the Corporate Debtor, its Promoter, or any other person required to assist or co-operate with IRP, do not assist or co-operate, the IRP is at liberty to make the appropriate application to this Adjudicating Authority with a prayer for passing an appropriate order.
In terms of Section 14 of the Code, upon commencement of CIRP, the following moratorium is declared:
a)The institution of suits or continuation of pending suits or proceedings against the respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
b)Transferring, encumbering, alienating or disposing of by the respondent any of its assets or any legal right or beneficial interest therein;
c)Any action to foreclose, recover or enforce any security interest created by the respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
d)The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the respondent.
Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period;
V. However, during the pendency of moratorium period in terms of Section 14(2) and 14(3) as extracted hereunder;
2.The supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.
(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the Corporate Debtor and manage the operations of such Corporate Debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such Corporate Debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified.
(3)The provisions of sub-section (1) shall not apply to
a)such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority;
b)a surety in a contract of guarantee to a corporate debtor.
The duration of period of moratorium shall be as provided in section 14(4) of the code which is reproduced below for ready reference;
(4)The order of moratorium shall have effect from the date of such order till the completion of the Corporate Insolvency Resolution Process:
Provided that where at any time during the Corporate Insolvency Resolution Process period, if the Adjudicating Authority approves the Resolution Plan under sub-Section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or Liquidation Order, as the case may be.
The IRP shall make public announcement and invite claims under Section 15 of the Code and take control of the management of the Corporate Debtor’s affairs, assets, and records forthwith. The IRP shall after collation of all the claims received against the Corporate Debtor and the determination of the financial position of the Corporate Debtor constitute a Committee of Creditors (hereinafter referred as ‘CoC”) and shall file a report certifying the CoC to this Tribunal on or before the expiry of thirty days from the date of his appointment, and shall convene the first meeting of the CoC within seven days of filing the report of CoC.
The IRP shall be under a duty to protect and preserve the value of the property of the Corporate Debtor Company and manage the operations of the Corporate Debtor Company as a going concern as a part of the obligation imposed by Section 20 of the Insolvency & Bankruptcy Code, 2016.
The commencement of the Corporate Insolvency Resolution Process (CIRP) shall be effective from the date of this order.
Copy of the order shall be communicated to the Applicant, Corporate Debtor as well as to the IRP appointed herein, by the Registry. In addition, a copy of the order shall also be forwarded to IBBI for its records and also to RoC for updating the Master Data. RoC shall send compliance report to the Registrar, NCLT.
We direct the Applicant to deposit a sum of Rs. 1,00,000/- with the Interim Resolution Professional, to meet out the expenses to perform the functions assigned to him in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. The needful shall be done within one week from the date of receipt this of order by the Financial Creditor.
Accordingly, CP(IB) 9/(M.P.) 2025 stands allowed.