# In the matter of Faime Makers Pvt. Ltd.

> NCLT judgment dated 2024-02-07. Citation: TCN-2024-NCLT-02731. LPHP Real Estate Private Limited filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 7 Feb 2024
- **Citation:** TCN-2024-NCLT-02731
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/faime-makers-pvt-ltd-5edcd97d

## Summary

### Background

LPHP Real Estate Private Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Faime Makers Pvt Ltd, seeking to initiate Corporate Insolvency Resolution Process (CIRP) due to alleged default in repayment of debt. The Financial Creditor claimed a default of Rs. 14,84,81,708/-, comprising a principal amount of Rs. 11,35,00,000/- and interest of Rs. 3,49,81,708/-. The Corporate Debtor raised objections regarding the maintainability of the petition, arguing that the financial assistance was beyond the object clause of the Financial Creditor's Memorandum of Association (MoA) and in contravention of Section 186(2) of the Companies Act, 2013.

## Facts

LPHP Real Estate Private Limited (Financial Creditor) filed a petition against Faime Makers Pvt Ltd (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, claiming a default of Rs. 14,84,81,708/-. The default date was stated as 01.03.2020. The Corporate Debtor is in the business of building and construction and owns a plot of land in Village Bandivali, Mumbai. A Development Agreement was executed between the Corporate Debtor and Navnirman Welfare Society on 10.10.2012 for redevelopment of the plot. The Corporate Debtor approached the Financial Creditor for financial assistance, leading to a Finance Agreement dated 08.01.2019, where the Financial Creditor agreed to provide up to Rs. 38,00,00,000. An amount of Rs. 12,00,00,000 was disbursed in

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## Issues and analysis

### Issue 1: Whether the financial assistance provided by the Financial Creditor to the Corporate Debtor was …

**Ratio:** The doctrine of ultra vires dictates that a company can only act within the scope of its

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**Reasoning:** The NCLT examined the MoA of the Financial Creditor and found that its objects included

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**Interpretation:** The MoA defines the permissible activities of a company. The interpretation of

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**Application:** The NCLT applied the principle by examining the Financial Creditor's MoA and

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## Parties

- **Judges:** LAKSHMI G…; Charanjeet Singh…
- **Appellants:** LPHP Real Estate…
- **Respondents:** Faime Makers Pvt…

## Timeline

- **2012-10-10 — Development A…**: A Development Agreement was executed between the Corporate Debtor and Navnirman Welfare…
- **2019-01-08 — Finance Agr…**: The Financial Creditor and the Corporate Debtor executed a Finance Agreement where the…

## 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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