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....t. Ltd. ("Neo Capricorn") and order dated 08.07.2025 passed by National Company Law Tribunal, Mumbai Bench, Court-I in CP(IB) No.291 of 2023 in Omkara Asset Reconstruction Pvt. Ltd vs. Gstaad Hotels Pvt. Ltd. ("GSTAAD Hotels"). By the impugned order dated 08.07.2025, Section 7 applications filed by Omkara Asset Reconstruction Pvt. Ltd - Financial Creditor, have been admitted, initiating Corporate Insolvency Resolution Process ("CIRP") against the two Corporate Debtors ("CD") namely - Neo Capricorn Plaza Pvt. Ltd. and GSTAAD Hotels Pvt. Ltd. Aggrieved by order admitting Section 7 applications, these two Appeal(s) have been filed by Suspended Directors of the respective CDs. 2. We may first notice the brief facts of the case giving rise to these two Appeal(s): (i) A Loan Agreement dated 26.12.2017 was entered between GSTAAD Hotels, Neo Capricorn and Piramal Finance Ltd. (the present Appellant(s)/ entities, who are mentioned as Promoter/ Obligor) for sanctioning of a facility to both the CDs, GSTAAD Hotels and Neo Capricorn. Financial facilities of a term loan of Rs.450 crores was sanctioned to GSTAAD Hotels with Rs.50 crores as revolving credit facility. Neo Capricorn was....
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....recall notice against GSTAAD Hotels was Rs.666,53,26,968. On the same day by a separate recall notice dated 15.02.2023, issued to Neo Capricorn, claiming total outstanding amount as Rs. 119,99,23,320/ -. Both GSTAAD Hotels and Neo Capricorn replied to the recall notice on 20.02.2023 stating that they continue to pay the Piramal and they asked for copy of the Assignment Agreements. (ix) On 09.03.2023, CP(IB) No.290 of 2023 was filed by Omkara Asset Reconstruction Pvt. Ltd against Neo Capricorn and CP(IB) No.291 of 2023 was filed against GSTAAD Hotels Pvt. Ltd. (x) On 10.03.2023, a Writ Petition was filed by GSTAAD Hotels in the High Court of Karnataka being Writ Petition No.6037 of 2023 impugning the acts of the Lender assigning the debt to Omkara Asset Reconstruction Pvt. Ltd. (xi) In CP(IB) Nos.290 and 291 of 2023 - CDs filed the reply, to which rejoinders were also filed. The Adjudicating Authority vide two separate orders passed on 09.01.2024 admitted CP(IB) No.290 of 2023 against Neo Capricorn, initiating CIRP and by a separate order of the same date admitted CP(IB) No.291 of 2023 against GSTAAD Hotels. (xii) Challenging the orders dated 09.0....
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.... the CD - GSTAAD Hotels Pvt. Ltd. 3. We have heard Shri Ajesh K. Shankar, learned Counsel appearing for the Appellant; Shri Krishnendu Datta, learned Senior Counsel and Shri Abhijeet Sinha, learned Senior Counsel appearing for the Financial Creditor; Shri Sanam Preet Singh and Shri Suraj Dhawan, learned Counsel appearing for Respondent No.2. 4. The arguments advanced by learned Counsel for the Appellant in both the Appeal(s) as well as learned Counsel for the Financial Creditor in both the Appeal(s) being common, we hereinafter refer in both the Appeal(s) as submissions of the Appellant and submissions of the Financial Creditor. It shall be sufficient to refer to the pleadings in Company Appeal (AT) (Ins.) No.1040 of 2025 for deciding both the Appeal(s) in addition to reference in Company Appeal (AT) (Ins.) No.1039 of 2025 as and when necessary. 5. Learned Counsel for the Appellant submits that order of Adjudicating Authority dated 08.7.2025 is not in accordance with order of remand dated 08.01.2025 passed by this Tribunal in Company Appeal (AT) (Ins.) Nos.165 & 212 of 2024. It is submitted the several findings returned by this Tribunal in its order dated 08.01.2025 operat....
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....at Chartered Accountant Report relied by the Appellant, clearly proved that there was no default on 15.11.2022, which was ignored by the Adjudicating Authority. The application was filed by the Financial Creditor as a recovery measure and was filed with malafide intention. The Adjudicating Authority ignored the said aspect. The Adjudicating Authority also erred in observing that that in pro-rata appropriation of the DSRA only 26% amount could be adjusted to ECLGS Facilities, which was neither averred or contemplated under the Loan Agreement Clauses. The NCLT has conducted roving enquiry in the impugned order. There was never any demand or shortfall from both the CDs. Both the CDs are profit earning Companies and have been running the two hotels successfully, which are earning profits. The Adjudicating Authority in the impugned order has put two running Hotels in insolvency, which is not the purpose and object of the IBC. 6. Learned Counsel for the Financial Creditor refuting the submissions of learned Counsel for the Appellant submitted that argument of the Appellant that order of Adjudicating Authority is not in accordance with the remand order dated 08.01.2025 is incorrect. Th....
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....rt of Karnataka, learned Single Judge as well as the Division Bench have noted the submissions of the Appellant that CD has not contested the principal or interest payment was not overdue at any point of time. The admission, which has been recorded by learned Single Judge as well as the Division Bench, in the proceedings, which was initiated by the CD, is clearly binding on the Appellant in contending that there was no debt and default. It is submitted that there is no question of applicability of any principle of res-judicata. This Tribunal in the judgment dated 08.01.2025 has already repelled the submissions of the Appellant based on res-judicata relying on withdrawal of the earlier Section 7 proceeding filed by the IDBI Trusteeship. It is submitted that this Tribunal while remanding the matter, has clearly observed that this Tribunal is not expressing any conclusive opinion on any of the issues and it was for the Adjudicating Authority to decide the issues, after hearing the parties. It is submitted that the Adjudicating Authority has also held that even though the CD has positive EBIDTA, but the profits which have been earned by the CD was not sufficient to discharge its debt o....
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....s necessary to notice the judgment of this Tribunal dated 08.01.2025 by which, this Tribunal while setting aside the order admitting Section 7 application filed against both GSTAAD Hotels and Neo Capricorn, remitted the matter for fresh consideration before the Adjudicating Authority. In the aforesaid judgment, this Tribunal after noticing the submissions of the parties has framed 11 issues for consideration, which are contained in paragraph-14 of the judgment. Paragraph 14 of the judgment dated 08.01.2025 in Company Appeal (AT) (Ins.) Nos.165 & 212 of 2024 are as follows: "14. From the submissions of learned Counsel for the parties and the materials placed on record, following issues fell for consideration in these Appeal(s): (1) Whether Assignment dated 27.12.2022 made in favour of Omkara Assets Reconstruction Pvt. Ltd. by the Lenders was not in accordance with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ("SARFAESI Act") as well as the Circulars issued by the Reserve Bank of India, the account of Corporate Debtor having never declared as NPA or SMA? (2) Whether due to dismi....
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....unal relying on the order of the Karnataka High Court held that assignment dated 27.12.2022 having upheld by the High Court, the assignment cannot be allowed to be questioned in the Appeal. With regard to withdrawal of the earlier Section 7 applications filed by IDBI Trusteeship, it was held that withdrawal shall not operate res-judicata, insofar as the applications which have been filed by Omkara Asset. This Tribunal has held that Adjudicating Authority committed error in not considering the Cash Management Agreement between the parties on mere denial of the Financial Creditor of the said Agreement, this Tribunal held that Adjudicating Authority was obliged to consider the amount transferred to Lender under the Cash Management Agreement towards servicing of debt for returning the finding of default by the CD. With respect to DSRA, it was held that said was as per the Loan Agreement dated 26.12.2017 and the amount in DSRA was required to be appropriated towards payment of principal and interest due under the Loan Agreement. It was also held that there was no admission by the CD about the default and this question was required to be considered. Rejection of submission of CD with reg....
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....; XXX XXX In the meantime, in pursuance of the impugned order Committee of Creditors may not be constituted. However, the IRP shall ensure that there is no hindrance caused in running of the hotel by the operating management agency, with the assistance of the ex- management and their employees who shall cooperate with the IRP. XXX XXX XXX " 63. The IRP has also filed its written submissions, which mentions that Corporate Debtor is being run as a going concern and IRP has incurred operational costs during CIRP. 64. In view of the foregoing discussions and our conclusions, we dispose of both the Appeal(s) in following manner: (1) Company Appeal (AT) (Ins.) No. 165 of 2024 is allowed. The impugned order dated 09.01.2024 passed in C.P.(IB) No.291/MB/2023 is set aside. (2) C.P.(IB) No.291/MB/2023 is revived to be considered afresh after hearing the parties. (3) Company Appeal (AT) (Ins.) No. 212 of 2024 is ....
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.... the CD, if there is any default committed by the CD, within the meaning of IBC. The IBC is a complete Code, which provides for special remedy. A CD, who commits the default, needs resolution, so as to it may revive itself and run as a going concern. In the impugned order dated 08.07.2025, passed by the Adjudicating Authority while admitting Section 7 application CP(IB) Nos.290 and 291 of 2023, has come to the conclusion that the CD required a resolution to address its financial stress. It is useful to quote paragraph 6.7.3 of the impugned order passed in CP(IB)No.291 of 2023, which is as follows: 6.7.3. As regard the intent and objects of the Financial Creditor behind the present Petition, it is noticed that the earlier Company Petition was filed by IDBI on behalf of erstwhile Lenders and was withdrawn prior to assignment of credit facilities in favour of the Financial Creditor, which indicates that it was the erstwhile Lenders who had moved the earlier Petition for recovery of the money and withdrew it when it found its successor to provide it an exit. The Financial Creditor has also placed on record certain e-mail communication in month of April 2024 whereby one Angels ....
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....n the Third Schedule or any of the conditions subsequent set out in the Fourth Schedule, to the satisfaction of the Lender. 19.5 Management Control 19.5.1 The Obligors are no longer actively involved in the Borrowers and/or its business; or are taking any steps to cease to be so involved; 19.5.2 There is a change in the management of the Borrowers, without the prior written consent of the Lender. 19.6 Authorization GHPL NCPL Deepak Raheja Anita Rajeja PBDPL Aditya Raheja Shiv Raheja ARIIPL Lender Piramal 19.6.1 The Borrowers fail to obtain any Authorisation necessary for the operation of the Projects or any other Authorisation necessary for the Borrowers to carry on their respective businesses that is required at such particular time. 19.6.2 Any Authorisation necessary for the Projects or necessary for the Borrowers to carry on their businesses that is required at such particular time is modified, amended, revoked, refused, not renewed before its expiry, withheld or does not remain in full force and eff....
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....id through such other funds as may be necessary for this purpose and acceptable to the Lender. Thus, it is true that amount in the Retention Account is relevant for consideration as to whether there was sufficient fund to meet the debt obligations of the CD or not. This Tribunal while its remand order dated 08.01.2025 has directed for consideration of the CMA and this Tribunal has clearly directed that the question of default on the part of the CD is to be determined after considering the CMA and amount therein. The Adjudicating Authority in the impugned order has noticed the relevant Clauses of the CMA. Paragraph 6.2 of the order dated 08.07.2025 in CP(IB) No.291 of 2023 noticed the CMA and its various Clauses in paragraph 6.2.1, 6.2.2 and 6.2.3. 15. One of the submissions, which has been advanced by learned Counsel for the Appellant is that there was excess withdrawal of Rs. 10,35,88,444/- from the Retention Account, beyond the profit of the owner. It is submitted by the Appellant that Lender/ Financial Creditor failed to deposit the above excess amount and had the said excess amount had been deposited, there would have been no default on 15.11.2022. The Retention Account is a....
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....ad not fallen due. Further, these overdraws do not pertain to the period, in consideration in this application i.e. November 2022 to February 2023. Nonetheless, had there been a refund of any amount over withdrawn in terms of monthly reconciliation for the period from November, 2022 to February, 2023 by the lenders, this would have further increased the amount claimed to be in default on the relevant dates. It is also noted that no precipitative action has been taken by the Operator in terms of Clause 2 of CMA." 16. After considering the CMA and respective submissions of the parties with regard to default by GSTAAD Hotels on 15.11.2022, a finding has been returned by the Adjudicating Authority with regard to default on 15.11.2022. The Adjudicating Authority found that there was default both with regard to ECLGS-1 and ECLGS-2 Facilities on 15.11.2022. The said finding has been returned after perusal of the Statement of Accounts. It is useful to notice paragraphs 6.3.5, 6.3.6 and 6.3.7 of the order dated 08.07.2025 in CP(IB) No.291 of 2023, which is to the following effect: "6.3.5. The Financial Creditor has alleged an overdue interest of Rs. 1,74,34,155/- and Rs. 96,7....
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....ven after such appropriations, the amounts due under ECLGS-1 & ECLGS- II facilities remains in default. 6.3.7. As regards the contention of the Corporate Debtor that the Financial Creditor ought to have utilised the undisbursed DSRA amount of Rs. 3.00 Crore to have the overdue interest paid, it is noted from the Statement of Account for period from 15.11.2022 to 30.4.2024 provided by Financial Creditor to the Corporate Debtor that the total interest outstanding as on 15.11.2022 in respect of all credit facilities, including ECLGS facility, aggregates to Rs. 9,87,30,348/-, besides default interest under Loan/RCF facilities amounting to Rs. 2,90,87,114/ -. In terms of rules of appropriations agreed in terms of Clause 29.1 of the Agreement dated 26.12.2017, any part payment has to be adjusted on pro-rata basis, first towards default interest, thereafter towards interest and thereafter towards principal repayment. There is neither any provision in both ECLGS Agreements in relation to DSRA nor do these Agreements extend the DSRA Account under the Loan Agreement dated 26.12.2017 to these facilities. Nonetheless, even if the undisbursed amount of DSRA (which shall increase the Lo....
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....ipal balance as per said statement as on 15.11.2022 is Rs. 15,42,75,000/-, which clearly shows that there was a default in payment of ELCGS facility as on 15.10.2022 as well as 15.11.2022 even Date No of days Opening Balance Interest Repayment Total Outstanding 15-11-2022 15,43,75,000 27,72,362 15,71,47,362 30-11-2022 15 8,39,554 47,75,023 15,32,11,893 31-12-2022 31 16,91,627 1,39,53,782 14,09,49,739 31-01-2023 31 15,56,240 83,61,556 13,41,44,423 28-02-2023 28 13,37,769 80,13,759 12,74,68,433 31-03-2023 31 14,07,391 90,80,580 11,97,95,244 30-04-2023 30 12,80,004 1,00,72,711 11,10,02,537 31-05-2023 31 12,25,590 90,10,904 10,32,17,223 30-06-2023 30 11,02,869 84,02,452 9,59,17,641 31-07-2023 31 10,59,036 94,29,123 8,75,47,554 31-08-2023 31 9,66,621 81,04,930 8,04,09,245 30-09-2023 30 8,59,167 67,31,136 7,45,37,276 31-10-2023....
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....to advance payment against its obligation under the agreements, which otherwise had not fallen due." 18. The Adjudicating Authority has also upheld the recall notice dated 15.02.2023 issued to both GSTAAD Hotels as well as Neo Capricorn, which findings have been returned in both the orders. It shall be useful to notice paragraphs 6.2.8 and 6.2.9 of the order dated 08.07.2025 in CP(IB) No.291 of 2023, which are as follows: "6.2.8. It is also pertinent to note Clause 7.2.6 of the Agreement, which provides that "Notwithstanding anything contrary contained herein, upon completion of the 5th (fifth) anniversary of the first Disbursement Date of the GHPL Loan and/or NCPPL Loan, as the case maybe, or upon completion of the 10th (tenth) anniversary of the first Disbursement Date of the GHPL Loan and/or NCPPL Loan, as the case maybe, the Lender at its discretion shall have a right within 6 (six) months following such 5th (fifth) anniversary or 10th (tenth) anniversary of the first Disbursement Date of the GHPL Loan and/or NCPPL Loan, as the case maybe, or upon completion of the 10th (tenth) anniversary of the first Disbursement Date of the GHPL Loan and/or NCPPL Loan, as the cas....
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....ground of positive EBIDTA, while the Corporate Debtor is clearly failing to service the normal interest and principal repayment obligations on month on month basis till December 2023 i.e. month prior to admission of Corporate Debtor into CIRP in the earlier round. Accordingly, we are of the considered view that there do not exist even exceptional circumstances warranting exercise of discretion assuming such discretion, if any, is vested in this Tribunal u/s 7 of the Code." 20. The above findings have been returned by the Adjudicating Authority after considering all relevant details, including the revenue from operations, liabilities and loan obligations, it was found that profits are not sufficient to meet the obligations. 21. The learned Counsel for the Appellant has also taken exception to the findings of the Adjudicating Authority that with regard to DSRA, the Adjudicating Authority has held that even though amount was to be adjusted from DSRA, the balance of Rs.3 crores in GSTAAD Hotels and only 26% on pro-rata basis would fall for satisfying the liabilities under ECLGS Facilities. The Adjudicating Authority in the impugned order has noted the relevant Clauses of the Agre....
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....ment of a part of debt when it becomes due and payable will amount to default on the part of a corporate debtor. In such a case, an order of admission under Section 7 IBC must follow. If NCLT finds that there is a debt, but it has not become due and payable, the application under Section 7 can be rejected. Otherwise, there is no ground available to reject the application." 23. There cannot be any dispute to the proposition that event of default must arise from the Agreement. Several judgments cited of this Tribunal and the Hon'ble Supreme Court on the said proposition, need no repetition. In the present case, the event of default has been noticed in Clause 19 of the Agreement, which we have already extracted above. 24. Another proposition, on which reliance has been placed by the Appellant is that cash liquidity of the CDs and its financial health, which is relevant to be noticed and the purpose and object of the IBC is to see an attempt to revive the CD and make it a running concern. In the present case, reliance has been placed by the Appellant on judgment of the Hon'ble Supreme Court in Indus Biotech Put. Ltd. vs. Kotak India Venture (Offshore) Fund & Ors. - (2021)....
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....erest outstanding instead of working capital requirements of the Company, it is to be understood that such utilisation of ECLGS facility loan only resulted into reduction of interest and principal obligations under the Loan Agreement. The Financial Creditor has placed on record various disbursement request under ECLGS facilities stating the details of retention account for credit of disbursed money in that account. This clearly indicates the voluntary consent of the Corporate Debtor to allow appropriation of such disbursed sums under ECLGS facilities for discharge of obligation under other outstanding credit facilities to keep those facilities in order and avoid the obligation of the Corporate Debtor/Obligors to otherwise service to those obligation from their other sources as contemplated in clause 18.39 of the Agreement. Even if it is in contravention of the Purpose for which the Loan was sanctioned, the said adjustment has only helped the Corporate Debtor to stay float by being able to honour its payments obligations under the Loan Agreement. The ECLGS loan carried an interest @ 13% p.a. which is lower than the interest chargeable under the Loan Agreement. It is also noteworthy ....