# In the matter of Dheeraj Wadhawan vs. Yes Bank Ltd. & Ors.

> NCLAT judgment dated 2022-03-16. Citation: TCN-2022-NCLAT-00575. This appeal challenges the Adjudicating Authority's order dated 27.09.2021, which admitted an…

- **Court:** NCLAT
- **Order date:** 16 Mar 2022
- **Citation:** TCN-2022-NCLAT-00575
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/dheeraj-wadhawan-vs-yes-bank-ltd-ors-0175d0fa

## Summary

### Background

This appeal challenges the Adjudicating Authority's order dated 27.09.2021, which admitted an application by Yes Bank Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code (IBC). The appellant, the suspended director of RKW Developers Private Limited (Corporate Debtor), contests the order. The case revolves around a term loan of Rs. 1,700 crores sought by Belief Realtors Pvt. Ltd. (Principal Borrower) from Yes Bank for a project in Mumbai. The loan was split into two tranches: Rs. 750 crores to Belief Realtors and Rs. 950 crores to RKW Project Management Pvt. Ltd. A corporate guarantee was issued by the Corporate Debtor and the Appellant. The first tranche was disbursed, and a facility fee of Rs. 100 crores was deducted. The second tranche

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## Facts

Belief Realtors Pvt. Ltd. sought a term loan of Rs. 1,700 crores from Yes Bank for a development project in Mumbai. The loan was structured in two tranches: Rs. 750 crores for Belief Realtors and Rs. 950 crores for RKW Project Management Pvt. Ltd. A facility fee of Rs. 100 crores was charged for the entire loan. The first tranche was disbursed on 27.09.2018, and the facility fee was deducted. The second tranche was cancelled on 13.12.2018 at the request of the Corporate Debtor. The borrower requested a refund of the proportionate facility fee (Rs. 55.88 crores) for the cancelled tranche on 29.07.2019. The bank did not respond but internally considered the matter. The bank partially refunded Rs. 10 crores in September 2019. The bank declared the account NPA on

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority erred in admitting the Application under Section 7 of the …

**Ratio:** For initiating proceedings under Section 7 of the IBC, the Financial Creditor has to

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**Reasoning:** The Adjudicating Authority did not correctly appreciate whether a default was committed

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**Interpretation:** Section 7 of the IBC requires the Financial Creditor to prove that a default

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**Application:** The NCLAT found that the Adjudicating Authority failed to consider that after

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## Parties

- **Judges:** Ashok Bh…; Ashok Kumar…; +1 more
- **Appellants:** Dheeraj Wa…
- **Respondents:** RKW Developers…; Yes Bank…
- **Advocates:** J. P.…; C. Rashm…; +10 more

## Timeline

- **2018-06-28 — Facility…**: Facility letter dated 28.06.2018, disbursement of 1st tranche of the loan of Rs. 750…
- **2018-09-27 — Corporate Gu…**: A corporate guarantee was issued by the Corporate Debtor as well as the Appellant before…

## 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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