Sandeep Jain vs Idbi Trusteeship Services Limited & Anr

[Arising out of Order dated 08.01.2025 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in C.P. (IB) No. 751(PB)/2023]

IN THE MATTER OF:

Sandeep Jain ...Appellant

Versus

IDBI Trusteeship Services Ltd. & Anr. ...Respondents

Present: For Appellant: Mr. Arun Kathpalia and Ms. Pooja Mehra Saigal Sr. Advocates with Mr. Rajat Joneja and Ms. Sakshi Kapoor, Advocates. For Respondents: Mr. Krishnendu Datta and Mr. Abhijeet Sinha, Sr. Advocates with Mr. Pranjit Bhattacharya, Ms. Salonee Shukla, Mr. Akhil Nene and Mr. Auritro Mukherjee, Advocates for R-1. Mr. Abhirup Dasgupta, Advocate for RP/R-2.

JUDGMENT

(10th February, 2025)

Ashok Bhushan, J.

This Appeal by a Suspended Director of the Corporate Debtor- M/s.

Shree Vardhman Infraheights Private Limited has been filed challenging the

order dated 08.01.2025 passed by the Adjudicating Authority (National

Company Law Tribunal), Principal Bench, New Delhi admitting Section 7

application filed by IDBI Trusteeship Services Limited, the Financial Creditor.

The Appellant aggrieved by the impugned order has come up in this Appeal. 2

2. Brief background facts necessary to be noticed for deciding the Appeal

are:-

2.1. A Debenture Trust Deed dated 19.04.2016 was executed between the

Company- Shree Vardhman Infraheights Private Limited and Santur

Infrastructures Private Limited (a wholly owned subsidiary of the company)

and Promoters Sandeep Jain, Sachin Jain, Rishi Gupta, Vivek Aggarwal,

Gautam Chaudhary, Tushar Goel and IDBI Trusteeship Services Limited for

raising funds by issuing upto 140 number of to be listed, rated, senior, fully

secured, redeemable, transferable, interest-bearing non-convertible

debentures of face value of Rs.1,00,00,000/- includes Series A and Series B.

The first Amended Debenture Trust Deed was on 20.07.2017 and Restated

and Amended Debenture Trust Deed dated 27.09.2018. Default having been

committed on 30.06.2019, IDBI issued a repayment notice requiring the

corporate debtor to repay the outstanding amount. Upon failure of the same,

the financial creditor filed a Commercial Suit before the Delhi High Court.

During pendency of the suit proceeding before the Delhi High Court, parties

entered into the Settlement Agreement on 04.11.2019. On 04.11.2019, a

revised repayment schedule was arrived at by the parties which culminated

in the parties entering into Restated and Amended Debentures Trust Deed

dated 04.11.2019.

2.2. The Restated and Amended Trust Deed dated 04.11.2019

acknowledged that as on 30.09.2019 outstanding principal amount of existing

debenture was Rs.125 Crores. Unpaid interest outstanding on the existing

debenture was Rs.24,53,04,939/- and Rs.59,70,827/- towards unpaid tax

Company Appeal (AT) (Insolvency) No. 146 of 2025 3

deducted by the issuer. Parties agreed to re-schedule and restructure the

existing debentures and revised the terms of the existing debentures.

Company proposed to raise funds by way of issuance of up to amount

aggregated to Rs.30 Crores at 'Series D Debentures'. New repayment schedule

was also agreed between the parties on the basis of settlement between the

parties. The commercial suit pending in the Delhi High Court was decided on

21.11.2019 in terms of the Settlement Agreement dated 04.11.2019. Under

the restated settlement dated 04.11.2019, parties agreed for constitution of

Project Monitoring Committee (PMC) with respect to development of

residential project (Shree Vardhman-Victoria). In the Project Management

Committee, three members were to be nominated by financial creditor and

two members by the corporate debtor. The Project Management Committee

was contemplated to monitor the project. The Corporate Debtor again failed

to fulfil its payment obligation. The responsibility of construction,

development, marketing and sale of project continued with the corporate

debtor including payment obligation. On the request of the Corporate Debtor

repayment schedule was again revised on 23.11.2020. Parties again entered

into an Amendment to Restated and Amended Debenture Trust Deed on

23.11.2021. As per amendment to restated and amended trust deed dated

23.11.2021, repayment schedule was once again revised.

2.3. The corporate debtor failed to repay the amount on 31.12.2021 even in

terms of the revised repayment schedule. On 27.09.2023, default notice was

issued by the financial creditor to the corporate debtor. On 30.09.2023,

amount of Rs.263,00,46,668/- was due and payable to the corporate debtor.

Company Appeal (AT) (Insolvency) No. 146 of 2025 4

On 06.12.2023, Section 7 application was filed by the financial creditor

seeking initiation of CIRP against the corporate debtor. The corporate debtor

filed a reply to the section 7 application on 22.01.2024. IA No.1527 of 2024

was filed by the financial creditor seeking replacement of the proposed IRP.

IA No.3961 of 2024 was filed by the financial creditor seeking certain

directions. The Adjudicating Authority heard the parties and by impugned

order after returning the findings of debt and default has admitted Section 7

application. IA No. 1527 of 2024 was also allowed and disposed of aggrieved

by which order this Appeal has been filed.

3. We have heard Shri Arun Kathpalia, Learned Senior Counsel appearing

for the Appellant, Shri Krishnendu Datta and Shri Abhijeet Sinha, Learned

Senior Counsel for the Financial Creditors and Shri Abhirup Dasgupta,

Learned Counsel for the IRP.

4. Shri Arun Kathpalia, Learned Senior Counsel for the Appellant

challenging the impugned order submits that the Adjudicating Authority

failed to appreciate the evidence and circumstances that unequivocally

establish that the financial creditor exercised control over the project actively

and it was the financial creditor who orchestrated the alleged default. It is

submitted that the financial creditor by virtue of its majority position in the

Project Monitoring Committee constituted under a Settlement Agreement

dated 04.11.2019, exercised dominant control over the entire project. PMC

which was composed of three members nominated by financial creditor and

two by the company, had decision making authority over critical aspects of

Company Appeal (AT) (Insolvency) No. 146 of 2025 5

the project, including but not limited to sales, marketing, finances and

vendor/customers negotiations. Financial Creditor having full authority over

the funds, leaving the company with no independent control over the project's

cash flow, the alleged default was not attributable to the corporate debtor.

The Financial Creditor did not act as a financial creditor but as a co-promoter,

dictating key decisions and interfering with the project's day-to-day

operations. It is submitted that the eight towers in the project were almost

complete, however, the Financial Creditor persisted with the decision to carry

on construction with three other towers namely J, G1 and G2 which was to

be constructed under the additional FAR due to which action the existing

eight towers could not be completed and handed over. Completion of eight

towers and handing over possession and receiving final instalment from the

allottees could have assisted in paying the dues of financial creditors. The

financial creditors insisted on simultaneous by starting construction of

additional FAR without obtaining RERA approval. Section 7 application was

filed by the financial creditor due to disagreement with the company. The

debenture holders failed to cure the defects as pointed by Haryana RERA

Authority which led to ultimately cancellation of registration of project

concerning eight towers. On account of active steps taken by the company,

the RERA order dated 20.03.2023 has been set aside by the order dated

29.05.2024 and remitted the authority for fresh decision. Company has

already obtained Occupancy Certificate for the eight towers and is only

required minor finishing works to be able to handover the units to the buyers.

Shri Kathpalia, however, in his submissions did not dispute the debt and

Company Appeal (AT) (Insolvency) No. 146 of 2025 6

default but contended that debt and default in manner it had occurred could

not be a ground of admitting Section 7 application. Financial Creditors itself

having become co-promoter in view of the Settlement Agreement dated

04.11.2019 was equally responsible for completion of project and repayment.

5. Shri Krishnendu Dutta, Learned Senior Counsel for the Financial

Creditor refuting the submissions of the Counsel for the Appellant submits

that the only question to be determined in Section 7 application is debt and

default. Adjudicating Authority has to consider whether there is a financial

debt and whether there is a default committed in repayment of financial debt.

It is submitted that debt and default committed by the corporate debtor is not

even disputed. The question of debt and default being admitted fact, no error

has been committed by the Adjudicating Authority admitting Section 7

application. Default report from Information Utility is on record which

demonstrate that default occurred on 30.06.2023. It is submitted that the

debt and default has been acknowledged by the corporate debtor from time to

time. Letter dated 23.11.2020, Amendment to the Restated and Amended

Debenture Trust Deed dated 23.11.2021 and Financial Statements of the

corporate debtor for F.Y. 2021-2022 contained express acknowledgment of

the corporate debtor of default. The litigation between the parties which is

pending in the Delhi High Court including the proceeding for initiation of

arbitration filed by the corporate debtor as well as proceeding filed by the

financial creditor for execution of settlement agreement in no manner effect

the maintainability or decision on the Section 7 application. Section 7

application is special remedy provided by the Code which has been rightly

Company Appeal (AT) (Insolvency) No. 146 of 2025 7

invoked by the financial creditor. The Settlement Agreement dated 04.11.2019

cannot be read to mean that it is financial creditor who is controlling the

project. The PMC was constituted to monitor the project, to ensure

construction and to oversee by financial creditors construction and

development. It is however, submitted that Clause 2.6 of the Settlement

Agreement itself clarifies that the corporate debtor and promoters were

responsible for construction, development, marketing and sale of the project

and further repayment of amounts due to the financial creditor. The

Settlement Agreement in no manner affected the liability of the corporate

debtor to make the repayment of outstanding amount and the mere fact that

in the PMC, three members were nominated by financial creditor has no effect

and consequence on the clauses of the Settlement Agreement which oblige

the corporate debtor and promoters to make the repayment. It is submitted

that in fact the PMC was not allowed to function by promoters. With regard

to existing FAR which pertaining to eight projects, the financial creditor has

made request to the corporate debtor to cure the deficiency identified by

Haryana RERA and the defects having not been cured by the corporate debtor,

RERA Authority had to pass an order on 20.03.2023 cancelling the project

which was subsequently set aside on 29.05.2024. Corporate debtor claiming

it to be promoter has made an application before the RERA seeking release of

monies from the 70% RERA account. The cash balance in various accounts

were insufficient to fulfil the repayment obligation of the corporate debtor.

There is no infirmity in the order of the Adjudicating Authority admitting

Section 7 application.

Company Appeal (AT) (Insolvency) No. 146 of 2025 8

6. Shri Abhijeet Sinha, Learned Senior Counsel has supported the

submissions advanced by Shri Krishnendu Datta.

7. We have considered the submissions of the Counsel for the parties and

perused the record.

8. Section 7 application was filed by the financial creditor on 06.12.2023

claiming default of an amount of Rs.263,00,46,668/- as on 30.09.2023. The

issuance of Debenture Trust Deed dated 19.04.2016 and subsequent

amendments to Debenture Trust Deed including the amendment dated

23.11.2021 are matter of record. Copy of Section 7 application filed by the

financial creditor to initiate CIRP against the corporate debtor has been

brought on the record in Volume 10 of the Appeal. Part IV of Section 7

application and amount claimed to be in default mentioned an amount of

Rs.263,00,46,668/- as on 30.09.2023 and date of default as 31.12.2021 i.e.

failure in repayment as per revised terms of the amendment to third

Debenture Trust Deed.

9. Part IV of the application contains necessary pleadings pertaining to

debt and default. As per Amendment to the Restated and Amended Debenture

Trust Deed dated 23.11.2021, revised terms of repayment on 31.12.2021 was

mentioned as revised date of repayment in which the corporate debtor failed.

Counsel for the Respondent has referred to Financial Statements of the

corporate debtor for F.Y 2021-22 which also clearly mentioned the default.

Acknowledgment letter issued by the corporate debtor acknowledging the debt

Company Appeal (AT) (Insolvency) No. 146 of 2025 9

has been noticed by the Adjudicating Authority dated 23.11.2020 which letter

also contained the statement on behalf of the corporate debtor that grant of

additional rights to the PMC does not constitute any derogation or waiver of

the rights of the debenture holders arising from the Settlement Agreement.

10. As noted above, the debt and default is not even being contested on

behalf of the Appellant during the course of submissions. The submission

which has been pressed by the Appellant is that after Settlement Agreement

dated 04.11.2019, the PMC was constituted which consisted three members

of the financial creditors and two members of the company. The Financial

Creditor by majority controlled the PMC and default subsequent to

constitution of PMC is orchestrated by financial creditor and the said default

cannot be basis of any initiation of the CIRP process. Financial creditor cannot

be given benefit of its own inaction.

11. The PMC having been constituted as per the Settlement Agreement

dated 04.11.2019, we need to notice clauses of the Settlement Agreement

dated 04.11.2019. Settlement Agreement dated 04.11.2019 which is brought

on the record as Annexure A-7 in the Appeal is between the parties who had

executed the Debenture Trust Deed. The promoters were collectively referred

to as 'obligors'. It is useful to notice following statement in the Settlement

Agreement:-

"Promoter 1, Promoter 2, Promoter 3, Promoter 4, Promoter 5 and Promoter 6 are hereinafter collectively referred to as the "Promoters". The Company, the Promoters and Santur are hereinafter individually

Company Appeal (AT) (Insolvency) No. 146 of 2025 10

referred as "Obligor" and jointly as the "Obligors". The Company, the Promoters, Santur and the Debenture Trustee are hereinafter individually referred to as a "Party" and jointly as the "Parties"."

12. Clause B of the Settlement Agreement notices the payment default as

on 30.06.2019. Clause B of the Settlement Agreement is as follows:-

"B. As per the Initial Subscriber, on 30.06.2019, there was a payment default on the Debentures of Rs. 26,65,67,499/-(Rupees Twenty-Six Crores Sixty-Five Lakhs Sixty-Seven Thousand Four Hundred and Ninety- Nine only) comprising of Interest (including due TDS) of Rs 19,15,67,499/- (Rupees Nineteen Crores Fifteen Lakhs Sixty-Seven Thousand Four Hundred and Ninety- Nine Only) and principal of Rs. 7,50,00,000/- (Rupees Seven Crores and Fifty Lakhs Only). Further, as per the Initial Subscriber as on 30.09.2019 the Principal due on the Debentures is Rs 15,00,00,000/- (Rupees Fifteen Crores Only) and Interest due on the Debentures (including due TDS) is Rs 25,12,75,766/- (Rupees Twenty-Five Crores Twelve Lakhs Seventy-Five Thousand Seven hundred and Sixty-Six Only) aggregating to Rs 40,12,75,766/- (Rupees Forty Crores Twelve Lakhs Seventy-Five Thousand Seven Hundred and Sixty-Six Only). In respect of the above, certain disputes under the Restated and Amended DTD arose between the Parties pursuant to which the Debenture Trustee initiated the Enforcement Actions (as defined hereinafter) against the Obligors;"

Company Appeal (AT) (Insolvency) No. 146 of 2025 11

13. Settlement Agreement contemplated 'Constitution of Project Monitoring

Committee'. Clause 2.1 provides for setting of Project Monitoring Committee

which is as follows:-

"2.1 The Parties agree that, as part of this settlement, the Company will set up and appoint a Project Monitoring Committee ("PMC") with respect to the residential project being developed by the Company at Sector 70, Gurugram, Haryana under the name of 'Shree Vardhman Victoria', with the Existing FAR ("Project"). The PMC shall comprise of 5 (five) members, 3 (three) of which shall be nominated by the Debenture Trustee (acting on Approved Instructions) and the remaining 2 (two) members shall be nominated by the Promoters. The PMC shall act on the basis of majority decision. The minutes of each meeting of the PMC shall be duly recorded circulated to each of the members within seven (7) days of the date of such meeting. The Debenture Trustee (acting on Approved Instructions) and the Company shall at all time have the authority to replace and remove their respective nominees from the PMC and any such nomination will be effective immediately on written instructions from the nominating Party. The constitution and authority of the PMC will not be modified, rescinded or restricted in any manner whatsoever without prior written consent of the Debenture Trustee."

14. The purpose of the Project Monitoring Committee has been captured in

Clause 2.2 which is to the following effect:-

"2.2. The main purpose of the PMC shall be to monitor the Project, to improve the sales and collections from the

Company Appeal (AT) (Insolvency) No. 146 of 2025 12

Project and completing the construction of the Project. The rights (not obligation) of the PMC shall include the right to: apply for and obtain any required Project approvals, sell apartment units subject to the terms of this Agreement and develop and construct the Project. Further, the PMC will also have the right (not the obligation) to execute and register builder buyer agreement/ sale deed, as the case may be for Sale of apartments falling in the PMC Inventory, however, PMC shall exercise such right in the event the Company fails to execute or register such required documents within five (5) Business days of written request from the PMC for the same. The PMC would also be entitled to sell any retail units in the Existing FAR of the Project in accordance with the price matrix as may be mutually agreed to between the Company and PMC, at the time of sale of such retail units. It is further clarified that any commercial or institutional area on the Project forming part of the Existing FAR, that may be monetized is within the scope of the PMC and the PMC will sell the units in the said area in accordance with the price matrix as may be mutually agreed to between the Company and PMC, at the time of sale of such units. The PMC shall be authorised to undertake any steps and actions, as may be required to give effect to and achieve its aforesaid authority and purpose. Further, PMC shall, subject to the Applicable Laws, be entitled to take necessary actions and give written directions as are required in respect of the Project to employees, agents, consultants and any other representative and to third parties, including but not limited to sales and marketing agents, real estate brokers, vendors, contractors, service providers,

Company Appeal (AT) (Insolvency) No. 146 of 2025 13

government authorities, as is required for effective exercise of the PMC's rights, purpose and authority as set out herein. The PMC will have full authority, for and on behalf of the Company and its Board, to exercise and undertake and further authorise any persons it deems fit to take any actions as it has been authorised to undertake in terms of the resolutions constituting the PMC."

15. Clause 2.6 of the Settlement Agreement dated 04.11.2019 contained a

clarification that repayment of the amounts due is the obligation of the

obligors. Clause 2.6 is as follows:-

"2.6. It is clarified that (i) the responsibility for construction, development, marketing and sale of the Project in accordance with Applicable Laws and (ii) for repayment of the Amounts Due including but not limited to the outstanding and on-going interest and Redemption Amounts of NCDs in accordance with the Revised Repayment Schedules as set forth in this Agreement, is independent of the working of the PMC and is the obligation of the Obligors."

16. We also need to notice Clause 2.22 which again stated that payment of

interest and principal in respect of the debentures and New NCDs pursuant

to the applicable Revised Repayment Schedule is the obligation of the obligors.

Clause 2.22 is as follows:-

"2.22. The payment of interest and principal in respect of the Debentures and New NCDs pursuant to the applicable Revised Repayment Schedule is the obligation

Company Appeal (AT) (Insolvency) No. 146 of 2025 14

of the Obligors in accordance with the Restated and Amended DTD. The Obligors agree that in the event the Company fails to pay the Interest or principal on or before the scheduled payment date pursuant to Schedule D then it shall be a Payment Default and without any cure period with immediate effect on written notice of the same by the Debenture Trustee to the Company and the terms of the Restated and Amended DTD in case of such default shall apply with immediate effect from date of such notice. The cure periods for any non-payment default shall be as provided in the Restated and Amended DTD."

17. The PMC was constituted for the purpose and object to monitor the

project, to improve the sales and collections from the project and completing

the construction of the project. PMC was constituted to improve the

functioning of company qua the construction of the project. PMC in no

manner has undertaken the obligation of the obligors towards repayment

which is clearly reflected in Clauses 2.6 and 2.22 as extracted above. We,

thus, do not find any substance in the submission of Shri Arun Kathpalia

that after constitution of PMC in which there are three members of the

financial creditors i.e. majority, blame for non-payment of due amount can be

put on the financial creditor itself. The PMC was constituted to assist and

improve the operations and construction of the project which in no manner

diminish the obligation of the corporate debtor to fulfil its payment obligation.

The default in repayment of the obligation by obligors cannot in any manner

be put on the financial creditor nor constitution of PMC in any manner affect

Company Appeal (AT) (Insolvency) No. 146 of 2025 15

the obligation or absolve the corporate debtor from its default for repayment

of the debt.

18. Counsel for the Respondent is right in his submission that in Section 7

application the Adjudicating Authority was obliged to determine whether

default has occurred or whether debt was due as remained unpaid. The

Hon'ble Supreme Court in "E.S. Krishnamurthy and Others vs. Bharath

Hi-Tech Builders Private Limited- (2022) 3 SCC 161" referring to the earlier

judgment of the Hon'ble Supreme Court in "Innoventive Industries Ltd. vs.

ICICI Bank- (2018) 1 SCC 407" held following in paragraph 32:-

"32. In Innoventive Industries [Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, paras 28 and 30 : (2018) 1 SCC (Civ) 356] , a two-Judge Bench of this Court has explained the ambit of Section 7 IBC, and held that the adjudicating authority only has to determine whether a "default" has occurred i.e. whether the "debt" (which may still be disputed) was due and remained unpaid. If the adjudicating authority is of the opinion that a "default" has occurred, it has to admit the application unless it is incomplete. Speaking through Rohinton F. Nariman, J., the Court has observed : (SCC pp. 438-39, paras 28 &

30) "28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant.

Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to [Ed. : The word between two asterisks has been emphasised in original.] any [Ed. : The word between two

Company Appeal (AT) (Insolvency) No. 146 of 2025 16

asterisks has been emphasised in original.] financial creditor of the corporate debtor -- it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may

Company Appeal (AT) (Insolvency) No. 146 of 2025 17

not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be.

* * *

30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise."

(emphasis supplied)

19. Subsequent judgment of the Hon'ble Supreme Court in "M. Suresh

Kumar Reddy vs. Canara Bank and Ors.-(2023) 8 SCC 387" also decode

Company Appeal (AT) (Insolvency) No. 146 of 2025 18

the same proposition. It is useful to extract paragraph 11 of the judgment

which is as follows:-

"11. Thus, once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7. "Default" is defined under sub-section (12) of Section 3 IBC which reads thus:

"3. Definitions.--In this Code, unless the context otherwise requires--

* * * (12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not [paid] by the debtor or the corporate debtor, as the case may be;"

Thus, even the non-payment 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."

20. Counsel for the Appellant has also referred to the proceedings initiated

by the financial creditor at Delhi High Court for execution of the Settlement

Agreement as well as proceedings initiated for arbitration by the corporate

debtor in the Delhi High Court. It is well settled proposition that any dispute

even pending in the arbitration does not in any manner prohibit the financial

creditor to take remedy under Section 7. Counsel for the Appellant has much

Company Appeal (AT) (Insolvency) No. 146 of 2025 19

emphasised on the fact that the financial creditor has proceeded and utilised

the amount for construction with respect to additional FAR towers. The

Financial Creditors role was construction and monitoring of the project was

only as per PMC constituted. As per the Settlement Agreement dated

04.11.2019, any action taken by the PMC through its members consisting of

nominees of the financial creditor can have no consequence or effect on the

obligation and liabilities of the obligor to fulfil their obligation of repayment.

Adjudicating Authority in the impugned order after considering the

submissions of the parties has returned the findings that debt and default

has been proved. In paragraph 5(x), following was held:-

"x. Therefore, on the basis of arguments advanced and documents on record, the DSA and DTD as amended on 04.11.2019 and 23.11.2021 shall stand as valid and enforceable. That is the underlying factor for the debt and default that remains unpaid. All other interim arrangements basis court proceedings in multiple forums does not vanquish the debt. It lends credence to the continuing default and attempt to extricate but in vain. There are other additional documents like emails."

21. We do not find any infirmity in the findings returned by the Adjudicating

Authority that the financial creditor succeeded in proving the debt and default

and the ingredients under Section 7 are fulfilled. In view of the facts brought

on the record, it is clearly proved that there is a debt and default which has

been acknowledged from time to time by the corporate debtor. Corporate

debtor has failed to honour its repayment obligations as per financial

Company Appeal (AT) (Insolvency) No. 146 of 2025 20

document. Adjudicating Authority after considering all submissions of the

parties have rightly returned the finding of debt and default.

22. In view of the foregoing conclusions and discussions, we are of the view

that no ground has been made out to interfere with the impugned order dated

08.01.2025 passed by the Adjudicating Authority admitting Section 7

application. There is no merit in the appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

New Delhi Anjali

Company Appeal (AT) (Insolvency) No. 146 of 2025