NCLT Indore Bench Initiates Corporate Insolvency Resolution Process Against Garima Real Estate

Moratorium declared; Interim Resolution Professional appointed as financial creditors' plea under IBC, 2016, finds merit  

In a significant ruling, the Indore Bench of the National Company Law Tribunal (NCLT) has admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process (CIRP) against Garima Real Estate & Allied Limited. The petition, brought forth by Bhojraj Verma and others, was deemed maintainable as it fulfilled statutory requirements, including surpassing the financial debt threshold, and established a case of default by the corporate debtor.  

The tribunal, presided over by Member Judicial Mohan P. Tiwari and Member Technical Sanjeev Sharma, declared a moratorium effective immediately under Section 14 of the Code. This decision prohibits the institution or continuation of legal proceedings, transfer or disposal of assets, enforcement of security interests, and recovery of properties from the corporate debtor until the completion of the CIRP.  

The case arose when Bhojraj Verma and other financial creditors, who had invested in schemes promising assured returns, failed to receive their dues despite maturity dates having passed. The corporate debtor's failure to repay Rs. 9,52,000/- prompted the application, which was supported by 125 investors, thus meeting the requirement introduced by the 2019 amendment to the IBC.  

The tribunal also noted the involvement of the Securities and Exchange Board of India (SEBI), which had previously directed the corporate debtor to cease illegal fund mobilization activities and refund investors. Despite these directives, the corporate debtor did not comply, leading to continued default.  

Mr. Gagan Gulati has been appointed as the Interim Resolution Professional (IRP), replacing the initially proposed candidate. Mr. Gulati is tasked with assuming control over the management of Garima Real Estate, making public announcements, and inviting claims in accordance with the law.  

The tribunal's decision underscores the robustness of the Insolvency and Bankruptcy Code in addressing financial defaults and protecting the interests of creditors, ensuring a structured resolution process.  

Bottom Line:

Insolvency and Bankruptcy Code, 2016 - Application filed under Section 7 of the Code by financial creditors against a corporate debtor for initiation of Corporate Insolvency Resolution Process (CIRP) - Application maintainable as statutory requirements fulfilled, debt amount exceeds threshold, and default proven. Moratorium declared with immediate effect.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 3(12), 5(7), 5(8)(a), 7, 14, 15

Bhojraj Verma v. Garima Real Estate & Allied Limited, (NCLT)(Indore Bench) : Law Finder Doc Id # 2799331