# In the matter of Maxworth Realty India Ltd.

> NCLAT judgment dated 2018-07-18. Citation: TCN-2018-NCLAT-00202. The case involves an appeal against an order dated 5th January 2018, passed by the NCLT,…

- **Court:** NCLAT
- **Order date:** 18 Jul 2018
- **Citation:** TCN-2018-NCLAT-00202
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/maxworth-realty-india-ltd-5a0a44bf

## Summary

### Background

The case involves an appeal against an order dated 5th January 2018, passed by the NCLT, Bengaluru Bench, admitting an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The appellant, Mr. K. Kesava, a shareholder and director of Maxworth Realty India-(Corporate Debtor), challenged the order. The respondents, Ajay Gopaldas Samat (HUF) & Ors., had preferred the application under Section 7, which was admitted by the Adjudicating Authority. The main contention of the appellant was that there was a pre-existing dispute with the Corporate Debtor regarding the debt and default, making the Section 7 application not maintainable. The respondents claimed to be financial creditors, which the appellant disputed.

## Facts

Mr. K. Kesava, a shareholder and director of Maxworth Realty India-(Corporate Debtor), appealed against the admission of a Section 7 application under the Insolvency and Bankruptcy Code, 2016. The application was filed by Ajay Gopaldas Samat (HUF) & Ors., claiming to be financial creditors. The appellant argued that a dispute existed regarding the debt and default, rendering the Section 7 application not maintainable. The respondents claimed the corporate debtor defaulted on loan repayments. The appellant presented evidence of payments made, while the respondents argued that the payments were not specifically allocated to the debt in question. There were eight agreements between the parties, with complex repayment arrangements. The respondents had preferred an

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## Issues and analysis

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

**Ratio:** The Adjudicating Authority must ascertain the 'existence of a default' from the records

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**Reasoning:** The appellate tribunal found that there were eight agreements reached between the

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**Interpretation:** Section 7 of the Insolvency and Bankruptcy Code allows a financial creditor to

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**Application:** In this case, the appellate tribunal found that there was a dispute regarding

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…
- **Appellants:** K. Ke…
- **Respondents:** Maxworth Realty…; Ajay Gopaldas…
- **Advocates:** Balaji Srin…; Garima…; +2 more

## Timeline

- **2018-01-05 — Order by NCLT,…**: NCLT, Bengaluru Bench, passed an order admitting an application under Section 7 of the…
- **2018-07-18 — Order by…**: NCLAT set aside the order passed by the Adjudicating Authority, dismissed the application…

## 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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