# In the matter of Dharmesh S Jain Vs. SREI Equipment Finance Limited Company Appeal (AT) Insolvency No. 697 of 2022

> NCLAT judgment dated 2023-01-05. Citation: TCN-2023-NCLAT-00789. The case involves two appeals against the order dated 16.06.2022 passed by the National…

- **Court:** NCLAT
- **Order date:** 5 Jan 2023
- **Citation:** TCN-2023-NCLAT-00789
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/dharmesh-s-jain-vs-srei-equipment-finance-limited-company-appeal-97835465

## Summary

### Background

The case involves two appeals against the order dated 16.06.2022 passed by the National Company Law Tribunal (NCLT), Mumbai Bench-IV, which admitted an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by SREI Equipment Finance Limited against Nirmal Lifestyle (Kalyan) Private Limited. Company Appeal (AT) (Insolvency) No. 697 of 2022 was filed by the Suspended Director of the Corporate Debtor, while Company Appeal (AT) (Insolvency) No. 698 of 2022 was filed by five homebuyers in the real estate project 'Lifestyle City, Kalyan'. The appeals challenge the admission of the Section 7 application, primarily arguing that the default was imaginary, the Adjudicating Authority did not properly address the objections raised by the Corporate Debtor,

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## Facts

The Corporate Debtor, a real estate company, launched several projects under the name 'Lifestyle City, Kalyan'. A loan agreement was entered between the Corporate Debtor and SREI Equipment Finance Limited on 05.08.2019, with a personal guarantee executed by the Directors. A mortgage deed was also executed on 18.09.2019. The Financial Creditor disbursed Rs.84,23,75,000/-. Defaults in repayment occurred on 05.02.2020 and 05.03.2020. The Financial Creditor filed a Section 7 application claiming Rs.7,87,50,000/- as on 07.09.2020. The Adjudicating Authority admitted the application on 16.06.2022, noting the default amount was Rs.1,12,73,387/-. The Corporate Debtor argued the default was imaginary and the claim was based on insufficiently stamped documents. The Corporate

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was justified in admitting the Section 7 application filed by …

**Ratio:** The Adjudicating Authority is empowered to admit a Section 7 application if a default

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**Reasoning:** The Adjudicating Authority found that the default amount exceeded the threshold of Rs.1

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The Adjudicating Authority correctly applied Section 7 by verifying the default

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## Parties

- **Judges:** Ashok Bh…
- **Appellants:** Dharmesh S…
- **Respondents:** Nirmal Lifestyle…; SREI Equipment…

## Timeline

- **2019-08-05 — Loan Agre…**: Loan Agreement entered between Corporate…
- **2019-08-05 — Personal Gu…**: Personal Guarantee…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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