R. K. Purushothaman vs DE Grande Sports Private Limited

[PER: CORAM]

This is an application filed on 02.11.2024 by the Applicant- R. K. Purushothaman (hereinafter also referred to as the “Financial Creditor” or “Applicant”), against the Respondent- DE Grande Sports Private Limited (hereinafter referred to as the “Corporate Debtor”), under Section 7 of the Insolvency & Bankruptcy Code 2016 (in short, ‘the Code’) r/w Rule 4(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, seeking commencement of the Corporate Insolvency Resolution Process (‘CIRP’) of the Corporate Debtor, appointment of Interim Resolution Professional (‘IRP) and declaration of moratorium. The amount claimed to be in default is Rs. 3,62,08,997/-, including interest and the principal amount is Rs. 2,95,00,000/-.

From Part-I of Form 1, it is seen that the present application is filed by Mr. R. K. Purushothaman, an individual.

Part II of the Application in Form 1 reveals that the Respondent/Corporate Debtor i.e. Bogmallo Enterprises Limited, is a public limited company, having its registered office at 1605, 16^th Floor, Meraki Arena, Opp. R K Studio, V N Purav Marg, Chembur East, Mumbai- 400 071.

Part-III of Form 1 reveals that the Applicant has proposed the name of Mr. S. Maruthi to be appointed as the IRP of the Corporate Debtor in the event that this application gets admitted. The Applicant has also obtained the Written Consent from the proposed IRP above-named in Form 2, the copy of which is annexed to this Application as Exhibit J.

Part IV of the Application vide Form 1 reveals that the amount claimed to be in default by the Applicant/Financial Creditor is Rs. 3,62,08,997-.

The first date of default stated by the Applicant in Part IV is 04.10.2024.

The facts narrated by the Petitioner in Part IV of the Petition are stated hereinbelow:

Applicant has attached the following documents with the Application:

Mr. Thasulu Mani, has filed an affidavit-in-reply on behalf of the Respondent, which was solemnly affirmed, notarised and verified on 21.04.2025. The contentions of the Respondent in the aforesaid Affidavit are summarised hereinbelow:

The Respondent submits that the Applicant has relied upon a Loan Agreement annexed to the Company Petition; however, the said Loan Agreement is neither notarised nor supported by the requisite stamp paper. A copy of the Loan Agreement has been annexed and marked as Exhibit “B”.

The Respondent further submits that the Applicant is misleading this Hon’ble Tribunal and has suppressed material facts with an intention to take undue advantage of the insolvency proceedings. It is contended that the Applicant has failed to place a true and fair account of the facts before this Hon’ble Tribunal and has, therefore, misrepresented the case.

The Respondent submits that the Applicant has stated the date of default as 04.10.2024 in the petition; however, the Applicant has failed to submit a proper NeSL report clearly evidencing the occurrence of default. It is contended that the Applicant has merely annexed a copy of an email purportedly received from NeSL, and not an authenticated record of default.

The Respondent further submits that while the Applicant has asserted that the loan was sanctioned in the year 2020 and that the Respondent had not paid any interest till 2024, the Applicant has failed to explain how the date of default could arise after a lapse of four years. On this ground, the Respondent contends that the assertion regarding the date of default is inconsistent and untenable.

The Respondent submits that the Applicant has claimed interest up to 31.10.2024 despite having stated the date of default as 04.10.2024, thereby levying interest for a period subsequent to the alleged default and up to the filing of the present Company Petition, which is untenable in law.

The Respondent submits that the Applicant is misguiding and misleading this Tribunal by failing to place the true and correct facts on record. It is further submitted that no mortgage or any other security has been created by the Respondent in favour of the Applicant. In view of the foregoing, the Respondent contends that the captioned Company Petition is not maintainable and is liable to be dismissed.

We have heard the learned Counsel for the Applicant and the Respondent. We have perused the materials and documents placed by both the parties on record of this Tribunal. Written submissions by the Applicant and the Respondent have also been placed on record.

From the Reply of the Respondent, it is seen that the Respondent is not denying the factum of loan agreement, execution of document and disbursement. However, certain technical objections have been raised by the Respondent.

The primary contention raised by the Corporate Debtor is that the Loan Agreement dated 09.09.2020, relied upon by the Applicant, is neither notarised nor duly stamped and, therefore, cannot be relied upon for the purpose of admission of the present application.

In the present case, apart from the Loan Agreement, the Applicant has placed on record several independent and contemporaneous documents, including:

a. Demand Promissory Note dated 31.03.2022,

b. Bank statements evidencing disbursement of funds,

c. Ledger statements of the Corporate Debtor,

d. Financial statements of the Corporate Debtor for the year ending on 31.03.2023 reflecting the loan under “Current Borrowings – Unsecured”.

These documents clearly establish the disbursement of funds and acknowledgment of liability by the Corporate Debtor. Even assuming, arguendo, that the Loan Agreement is insufficiently stamped, the claim of the Financial Creditor stands fully corroborated by other admissible evidence.

Reliance placed by the Applicant on the judgments of the Hon’ble NCLAT in Ashique Ponnamparambath v. The Federal Bank Limited and Hiren Meghji Bharani v. Shankheshwar Properties Pvt. Ltd. is well founded, wherein it has been held that insufficiency of stamping does not render a Section 7 application non-maintainable when the existence of debt and default is otherwise proved.

Accordingly, the objection raised by the Corporate Debtor on the ground of unstamped or unnotarized Loan Agreement is not maintainable.

The Corporate Debtor has contended that the Applicant has failed to file an authenticated record of default from the Information Utility, namely NeSL, and has merely annexed an email communication.

In the present case, the debt and default are evidenced by the recall notice dated 19.09.2024, failure of the Corporate Debtor to make payment within the stipulated period, bank statements, ledger accounts, and the admitted disclosure in the Corporate Debtor’s financial statements.

The judgement placed by the Applicant in Assets Care & Reconstruction Enterprise Ltd. Vs Rajesh Buildspace Private Limited (C.P. (I.B) No. 444/MB/2020), wherein Ld. Co-ordinate Bench 5 of this Tribunal, which has relied upon the Judgement of Hon’ble NCLAT in Vijay Kumar Singhania V. Bank of Baroda & Ors., held that:

Therefore, the absence of an authenticated NeSL record at this stage does not defeat the Applicant’s claim, and the objection raised by the Corporate Debtor on this ground is untenable.

The Corporate Debtor has further contended that the date of default mentioned by the Applicant, i.e., 04.10.2024, is inconsistent, considering that the loan was sanctioned in the year 2020 and interest was allegedly unpaid for several years.

On perusal of the Loan Agreement and the Demand Promissory Note, it is evident that the loan was repayable on demand, and interest was payable at the rate of 8% per annum from the date of disbursement.

The Applicant has issued a recall/demand notice dated 19.09.2024 calling upon the Corporate Debtor to repay the outstanding amount within 15 days. Upon failure of the Corporate Debtor to comply with the said demand, the debt became due and payable, and the default crystallised on 04.10.2024.

The definition of “default” under Section 3(12) of the Code contemplates non-payment of a debt when it has become due and payable. In the present case, the debt became due and payable upon issuance of the demand notice, and therefore, the date of default as stated by the Applicant is legally sustainable.

The contention of the Corporate Debtor that the date of default is inconsistent or untenable is, therefore, holds no water.

The Corporate Debtor has also objected to the computation of interest up to 31.10.2024 despite the date of default being 04.10.2024.

We are of the view that the contractual entitlement of the Financial Creditor to interest continues until actual payment, unless otherwise agreed. The computation of interest up to the date of filing of the application does not invalidate the occurrence of default under the Code.

In any event, even excluding the interest component, the principal amount outstanding exceeds the statutory threshold prescribed under Section 4 of the Code. Accordingly, this objection of the Corporate Debtor is devoid of merit. Moreover, at this stage, we are not crystallising the exact amount of the outstanding loan amount, which is left to the IRP to collate.

The Corporate Debtor has alleged that the Applicant is misusing the insolvency process and has suppressed material facts.

However, no material has been placed on record to substantiate such allegations. Mere bald assertions, without documentary support, cannot be accepted to defeat an application under Section 7 of the Code.

On the contrary, the documents placed on record demonstrate the existence of a financial debt and the occurrence of default, which remain unrebutted.

We rely upon the Hon’ble Supreme Court’s judgment in M/s. Innoventive Industries Ltd. v. ICICI Bank & Anr. (Judgment dated August 31, 2017 in Civil Appeal Nos. 8337-8338 of 2017) wherein it has been held as follows:

Upon perusal of the records, hearing the submissions and considering the judgments cited by the Petitioner, this Tribunal is satisfied that a financial debt exceeding the threshold of Rs. One Crore as per Section 4 of IBC, 2016 exists. There has been a default in repayment, the petition is within limitation, Petition is complete as all the required documents have been attached along with the Petition, all procedural requirements under Section 7 of the IBC, 2016 and Rule 4 of the Adjudicating Authority Rules are satisfied.

Further, the Applicant has proposed the name of Mr. Sabbani Maruthi to be appointed as the IRP, attached its consent in Form 2 and from the said Form 2 it is observed that there is no disciplinary proceeding pending against the proposed IRP.

In view of the above, we are of the view that the Petition filed by the Petitioner herein deserves to be admitted.

We make it clear that at this stage, we have not crystalized the amount as claimed in this petition, the same is left to be collated by the IRP.

In view of above, we pass the following order:

a. The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor 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 Corporate Debtor 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 Corporate Debtor 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 Corporate Debtor;

e. The provisions of sub-section (1) shall however, not apply to such transactions, agreements as may be notified by the Central Government in consultation with any financial sector regulator and to a surety in a contract of guarantee to the Corporate Debtor.