# In the matter of Canara Bank vs. DAAJ Hotels & Resorts Private Limited

> NCLAT judgment dated 2024-12-20. Citation: TCN-2024-NCLAT-00010. The case involves an appeal against the rejection of an application under Section 7 of the…

- **Court:** NCLAT
- **Order date:** 20 Dec 2024
- **Citation:** TCN-2024-NCLAT-00010
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/canara-bank-vs-daaj-hotels-resorts-private-limited-5f7d6135

## Summary

### Background

The case involves an appeal against the rejection of an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against DAAJ Hotels & Resorts Private Limited. Canara Bank, the appellant, claimed that the corporate debtor defaulted on financial assistance extended for the construction of a five-star hotel. The corporate debtor's account was declared NPA on 01.10.2012. The appellant initiated proceedings under Section 7 of the IBC after an OTS failed. The NCLT rejected the application based on limitation, considering prior proceedings under the Recovery of Debts and Bankruptcy Act, 1993 and SARFAESI Act.

## Facts

DAAJ Hotels & Resorts Private Limited aimed to construct a five-star hotel, requiring an investment of Rs.101.31 Crores. They approached financial creditors, including State Bank of India, State Bank of Hyderabad, and Canara Bank (the Appellant). State Bank of India extended Rs.40 Crores, SBH extended Rs.10 Crores, and Canara Bank extended Rs.30 Crores. Due to financial difficulties, the Corporate Debtor sought an additional Rs.25 Crores. Despite the financial assistance, the project did not materialize, leading to a default. The account was declared NPA on 01.10.2012. The consortium initiated proceedings under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, before the Debt Recovery Tribunal (DRT), Hyderabad, seeking to recover Rs.131,88,29,454.89.

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of …

**Ratio:** The limitation period for initiating proceedings under Section 7 of the I&B Code is

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**Reasoning:** The NCLT and NCLAT held that the right to apply accrued on 01.10.2012, when the account

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**Interpretation:** The court interpreted that the date of default is the date when the financial

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**Application:** The court applied the ratio to the facts of the case, noting that the NPA

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## Parties

- **Judges:** Sharad Kumar…; Indevar P…
- **Appellants:** Canara…
- **Respondents:** DAAJ Hotels &…

## Timeline

- **2012-10-01 — Account Decla…**: The account of the Corporate Debtor was…
- **2017-08-18 — Proceedings under Recovery of Debts and…**: Proceedings initiated under Section 19 of Recovery of Debts and Bankruptcy Act 1993…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 19 — Personnel to extend co-operation to interim…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-19)

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