Vivriti Capital Limited vs Gensol Electric Vehicles Private ...

IN THE MATTER OF: Vivriti Capital Ltd. ...Appellant(s)

Versus Gensol Electric Vehicles Pvt. Ltd. ...Respondent(s)

Present: For Appellant(s) : Mr. Abhijeet Sinha, Sr. Advocate with Mr. J. Rajesh, Mr. Dhrupad Vaghani, Ms. Gayatri Mohite, Mr. Md. Arsalan Ahmed, Mr. Yashwardhan Aggarwal, Mr. Ali Abbas Masoodi, Mr. Ashish Jha, Mr. Ashwath Reddy and Mr. Ajiz Mir, Advocates.

For Respondent(s) : None.

ORDER

(Hybrid Mode)

13.05.2026 Heard Ld. Counsel for the Appellant. No one appears for

the Respondent. Notices has been served to the Respondent but no reply is

filed. The Appeal proceeded ex-party against the Respondent, which is

recorded in the order dated 15.04.2026.

2. This Appeal has been filed against the order dated 10.09.2025 passed

by the Adjudicating Authority rejecting Section 7 application filed by the

Appellant.

3. Brief facts of the case necessary to be noticed for deciding the Appeals

are:

(i) The Appellant sanctioned a non-revolving rupee term loan of Rs.

5,00,00,000/- to the Respondent by sanction letter dated 03.08.2024. The

Master General Term Agreement and Facility Agreement were executed on 03.08.2024, various security documents were also executed. The facility

amount of Rs. 5,00,00,000/- was disbursed on 05.08.2024.

(ii) The default was committed by the Corporate Debtor in making

payment of the instalment due on 05.03.2025. Notice dated 17.04.2025 was

issued by the Appellant to the Corporate Debtor claiming total amount of Rs.

18,68,342/- which was due for payment on 05.03.2025. In pursuance of the

notice dated 17.04.2025 no payment was made, however, the Appellant from

the cash collateral adjusted amount against instalment due for March, 2025.

The balance amount in the cash collateral was also adjusted towards April,

2025 instalments, which was to be paid.

(iii) The default having been committed by the Corporate Debtor, on

02.05.2026, the Financial Creditor issued loan recall notice which loan recall

notice mentioned total outstanding amount of Rs. 3,87,87,657/- as on

05.03.2025.

(iv) After the said loan recall notice, when no repayment was made,

Section 7 application was filed by the Financial Creditor on 16.05.2025, in

which notices were issued and reply affidavit was filed on 01.07.2025.

4. The Adjudicating Authority heard the parties and by the impugned

order has rejected Section 7 application. The Adjudicating Authority in the

impugned order has held that the date of default mentioned as on 05.03.2025

in Part-IV of Section 7 application was not correct since the default of Rs.

18,68,342/- as on 05.03.2025 stood cured by adjustment from cash

collaterals of Rs. 42,50,000/- provided by the Corporate Debtor. When the

default came to be adjusted from the collateral, there was no default, the date 2 of 11 of default was not 05.03.2025 as claimed by the Financial Creditor. The

Adjudicating Authority took the view that Section 7 application is inherently

defective and incomplete because it fails to reflect the correct date of default

and correct default amount and does not provide an updated, accurate

computation of the amount due as required by law. In para 6.18 of the

Judgment, Adjudicating Authority made following observation:

"The Application filed under Section 7 of the IBC, 2016, is inherently defective and incomplete because it fails to reflect the correct date of default and correct default amount and does not provide an updated, accurate computation of the amount due as required by law. The Applicant has not complied with Section 7(3)(a) of the IBC in furnishing a valid record of default with accurate dates and amounts."

5. Ld. Counsel for the Appellant challenging the order submits that the

cash collateral was security which was taken by the Financial Creditor and

any recoupment from the said cash collateral was the right of the Financial

Creditor and in no manner shall change the date of default. When the

Corporate debtor failed to make the payment, default was committed and

there was no error in mentioning 05.03.2025 as date of default in Section 7

application. Further, it was clearly pleaded in Section 7 application that the

loan recall notice was issued on 02.05.2025, thereafter, the default continues

and outstanding amount which was claimed in the loan recall notice was total

amount of Rs. 3,87,87,657/- Adjudicating Authority committed error in

rejecting Section 7 application. Ld. Counsel for the Appellant has also placed

reliance on the Judgment of this Tribunal in CA(AT)((Ins.)No. 1302 of 2024,

3 of 11 Keval Krishan Sharma Vs. Navneet Gupta, Resolution Professional of Majestic

Hotels Ltd. & Ors.

6. We have considered the submission of the Ld. Counsel for the Appellant

and perused the record.

7. The notice dated 17.04.2025 was part of Section 7 application which

mention that default has been committed of payment of Rs. 18,68,342/-

which was required to be paid on 05.03.2025. The default being committed

notice dated 17.04.2025 was issued but no repayment was made. In

pursuance of the notice, hence, the amount was recouped from the cash

collateral as per the agreement between the parties. Subsequently, on

02.05.2025, loan recall notice was issued by the Financial Creditor giving

details of facility agreement and defaults committed by the Financial Creditor.

Total outstanding was mentioned in the loan recall notice including principal

and interest accrued. After the loan recall notice when amount was not paid,

Section 7 application was filed. In Part-IV of Section 7 application, the

Appellant has given brief facts of the case, details of the facility agreement

and the details with regard to default committed. Part-IV, column no.2, which

is as follows:

2. Amount claimed Total Default: Total outstanding from the Corporate

to be in default Debtor as on 28th April 2025 is as follows:

and the date on Particulars Amount in INR

Principal Outstanding 3,84,09,247/-

4 of 11 which the default Interest Accrued 3,66,522/-

occurred Penal Pending 11,888/-

Total Outstanding 3,87,87,657/-

The on 5th March 2025 in accordance with the terms

and conditions stipulated under the Sanction Letter

dated 03rd August 2024, the Facility Agreement

dated 03rd August 2024 and Master General Term

Agreement dated 03rd August 2024.

Despite repeated demands and opportunities

granted, the Corporate Debtor persistently failed and

neglected to make comply with the terms of the facility

and also make payment towards the Facility. Thus,

the Petitioner was constrained to issue ("Default

Notice") addressed to the Corporate Debtor wherein

the default in repayment of the Facility was brought

to the notice of the Corporate Debtor and was called

upon to make the payment of INR 18,68,342 /-

(Indian Rupees Eighteen Lakhs Sixty Eight Thousand

Three Hundred and Two Only) within 2 (two) working

days. However, the Corporate Debtor failed to comply

with the Default Notice. A copy of the Default Notice

5 of 11 dated 17th April 2025 is ^ annexed and marked

hereto as Exhibit "P".

Thereafter, the Petitioner adjusted the cash collateral

for the due of INR 18,68,342 /- (Indian Rupees

Eighteen Lakhs Sixty Eight Thousand Three Hundred

and Two Only) on 28th April 2025. Further the

Petitioner adjusted the remaining cash collateral for

the due of INR 23,81,658/ - (Indian Rupees Twenty-

Three Lakh Eighty-One Thousand and Six Hundred

and Fifty-Eight Only).

However, pursuant to the Corporate Debtor not

servicing the repayment of the Facility on the relevant

date, an event of default has occurred as per Clause

14(a) (Events of Default) of the MGTA. Therefore, the

Petitioner was constrained to issue a Loan Recall

Notice cum Invocation of Arbitration & Guarantee

dated 02nd May 2025 ("Loan Recall Notice") in

accordance with Clause 15.1 (Consequences of

Events of Default) of the MGTA and called upon the

Corporate Debtor, the Personal Guarantor and the

Corporate Guarantor to make the payment of

outstanding due amount as on 28th April 2025 i.e.,

INR 3,87,87,657/- (Indian Rupees Three Crore Eighty

6 of 11 Seven Lakh Eighty Seven Lakh Six Hundred and Fifty

Seven Only) ( "Outstanding Amount") to the

Petitioner within 1 (one) day. However, neither the

Corporate Debtor, the Personal Guarantor nor the

Corporate Guarantor paid the Outstanding Amount. A

copy of the Loan Recall Notice dated 02nd May 2025

is |y \annexed and marked hereto as Exhibit "Q".

It is submitted that the Petitioner had extended the

said Facility to the Corporate Debtor pursuant to the

Facility Agreement dated 03rd August 2024. As per

the terms and conditions of the said Facility

Agreement, the Corporate Debtor was under a

binding contractual obligation to repay the principal

loan amount along with interest at the rate of 15% per

annum and penal interest at the rate of 2% per annum

in case of default. The Corporate Debtor has failed

and neglected to make payment of a sum of INR

3,87,87,657/- (Indian Rupees Three Crore Eighty

Seven Lakh Eighty Seven Thousand Six Flundred and

Fifty Seven only) as on 28th April 2025, together with

applicable contractual interest and penal interest,

despite the due date for repayment having elapsed on

05th March 2025, as per the repayment schedule

7 of 11 provided under Schedule II of the Facility Agreement.

The said outstanding amount remains unpaid and

constitutes a financial debt as defined under Section

5(8) of the Code. The liability of the Corporate Debtor

is duly recorded and evidenced by the Facility

Agreement, the Demand Promissory Note, the Letter

of Continuity, and other ancillary documents

executed by the Corporate Debtor in favour of the

Petitioner. Further, the continued non-payment of the

aforesaid amount constitutes a "default" within the

meaning of Section 3(12) of the Code.

Hence, in the facts and circumstances of the present

case, the Corporate Debtor is liable to pay a sum of

INR 3,87,87,657/- (Indian Rupees Three Crore Eighty

Seven Lakh Eighty Seven Lakh Six Hundred and Fifty

Seven Only) along with interest thereon at the rate of

15% per annum and penal interest at the rate of 2%

per annum till realization to the Petitioner.

Date on which the Default occurred - 05th March

2025.

A copy of the working for computation of amount and

days of default is annexed hereto and marked as

Exhibit "R".

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8. The above detailed pleading in Part-IV clearly mentioned the default

including the loan recall notice on 02.05.2025. It was mentioned that default

was committed on 05.03.2025 which continues.

9. The Adjudicating Authority has taken note of the recoupment from cash

collateral and has come to conclusion that after recoupment from cash

collateral default on 05.03.2025 came to an end. Under the facility agreement

which was entered between the parties, the event of default has been provided

in clause 14 and consequence of the event of the default are given in para-15.

Clause 15.1 is as follows:

"15.1 If one or more of the events specified in Clause 14 (Events of Default) occur(s), then the Lender may, in its sole discretion, that is, without requiring any consent or confirmation of the Borrower, hereto by a notice in writing to the Borrower, initiate the following course of action:

(a) declare any undrawn portion of any outstanding Facility to be cancelled or suspended and/or place the Facility in relation to which the Event of Default has occurred on demand or declare all amounts payable by the Borrower in respect of the relevant Facility or all the Facilities availed by the Borrower from the Lender to be due and payable immediately;

(b) to convert the Outstanding Due Amounts into equity or other securities of the Borrower. The Borrower agrees to comply with Applicable Law including furnishing of necessary resolutions/authorisations to give effect to the Lender's right of conversion hereunder,

(c) make disclosure of details pertaining to the Borrower and/or any of the Security Providers to RBI or any other credit information company or such other entities as specified under Clause 17 (Disclosure of information);

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(d) to enforce any/all Security provided to the Lender in terms of this MGTA, the relevant Sanction Letter and the other Facility Documents and to enter upon and take possession of the Secured Assets;

(e) subject to the terms of the Facility Agreement and the relevant escrow agreement, any amounts lying to the credit of the Escrow Accounts and/or the DSRA may be utilised towards paying the Outstanding Due Amounts;

(f) to receive all amounts payable in relation to the Receivables;

(g) to exercise and enforce all rights and remedies available to the Lender under this MGTA, the relevant Facility Agreement and/or the other Facility Documents or under Applicable Law;

(h) the Lender shall have a right to review the management set up or organisation of the Borrower and to require the Borrower to restructure it as may be considered necessary by the Lender, including the formation of management committees with such powers and functions as may be considered suitable by the Lender."

10. The cash collateral which was part of security could have very well be

adjusted by the Financial Creditor towards the payment of any outstanding

dues but recoupment from cash collateral cannot lead to conclusion that no

default was committed on the relevant date. Ld. Counsel for the Appellant has

rightly relied on the Judgment of this Tribunal in Keval Krishan Sharma

(Supra) where in para 65 following has held:

65. The Appellant's argument that subsequent payments cured the default is inconsistent with both law and record. Under Section 3(12) of the IBC, "default"

means non-payment of a debt when it has become due and payable. Once default has occurred, it cannot be retrospectively "cured", unless the creditor expressly 10 of 11 withdraws the claim or settles it before admission. Payments made after the date of default are relevant only for computation of outstanding amount, not for erasing the historical fact of default.

11. The observation of the Adjudicating Authority that Section 7 application

is defective and incomplete cannot be sustained. All relevant pleadings were

contained in Part-IV and default was clearly made out. In the facts of the

present case, we are of the view that order impugned cannot be sustained. The

impugned order rejecting Section 7 application is set aside. The Section 7

application is revived before the Adjudicating Authority for passing a fresh

order in accordance with law at an early date. The Adjudicating Authority is

directed to pass an appropriate order expeditiously preferably within six

months from the date this order is produced.

12. The Appeal is disposed of.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Abhishek/md

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