# In the matter of MKHS Realty LLP

> NCLT judgment dated 2024-04-25. Citation: TCN-2024-NCLT-01587. The case involves an application for the substitution of the applicant, Reliance Commercial…

- **Court:** NCLT
- **Order date:** 25 Apr 2024
- **Citation:** TCN-2024-NCLT-01587
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mkhs-realty-llp-8298fdcc

## Summary

### Background

The case involves an application for the substitution of the applicant, Reliance Commercial Finance Ltd, in place of the erstwhile financial creditor, Reliance Home Finance Ltd, in a Corporate Insolvency Resolution Process (CIRP) against MKHS Realty. Reliance Home Finance Ltd had advanced credit facilities to MKHS Realty, which defaulted on payments, leading to the account being declared a nonperforming asset. Subsequently, Reliance Home Finance Ltd initiated CIRP under Section 7 of the I&B Code. During the CIRP, a resolution plan submitted by Authum Investment and Infrastructure Ltd (AIIL) was approved by the Supreme Court. Meanwhile, Reliance Home Finance Ltd entered into a Business Transfer Agreement with Reliance Commercial Finance Ltd, transferring its entire

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## Facts

Reliance Home Finance Limited (RHF) advanced credit facilities of Rs. 23,50,00,000 to MKHS Realty (MKHS) under a loan agreement dated 2017-02-28. MKHS defaulted on payments from 2019-06-30, leading to its account being classified as a non-performing asset on 2019-05-13. RHF issued a loan recall notice on 2019-01-22, claiming Rs. 11,34,13,847. RHF also issued a notice on 2019-07-06 under Section 13(2) of the SARFAESI Act. As of 2019-09-18, Rs. 12,79,80,498 was due from MKHS. RHF initiated CIRP against MKHS under Section 7 of the I&B Code. During the CIRP, a resolution plan by Authum Investment and Infrastructure Ltd (AIIL) was approved by the Supreme Court. A Business Transfer Agreement was executed on 2023-03-29 between RHF and Reliance Commercial Finance Limited

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## Issues and analysis

### Issue 1: Whether the Business Transfer Agreement between Reliance Home Finance Ltd and Reliance Commercial …

**Ratio:** Section 5(7) of the I&B Code defines a financial creditor as a person to whom a

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**Reasoning:** The court reasoned that the Business Transfer Agreement, specifically Clause 1.1.86 read

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**Interpretation:** The interpretation of Section 5(7) of the I&B Code is that a valid

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**Application:** The court applied the ratio to the facts by finding that the Business Transfer

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## Parties

- **Judges:** BIDISHA BA…; D. Ar…
- **Appellants:** Reliance Commercia…
- **Respondents:** MKHS Re…
- **Advocates:** Snehashi…; Danyal…; +2 more

## Timeline

- **2017-02-28 — Loan Agre…**: Reliance Home Finance Ltd advanced…
- **2019-06-30 — Default on P…**: MKHS Realty defaulted…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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