# In the matter of Rajesh Cityspaces Private Limited

> NCLT judgment dated 2024-01-15. Citation: TCN-2024-NCLT-03057. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 15 Jan 2024
- **Citation:** TCN-2024-NCLT-03057
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/rajesh-cityspaces-private-limited-0dcbf462

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Assets Care & Reconstruction Enterprise Limited (Financial Creditor) against Rajesh Cityspaces Private Limited (Corporate Debtor) for initiation of Corporate Insolvency Resolution Process (CIRP) due to a default in repayment of outstanding debt amounting to INR 37,46,19,798/- as of June 30, 2022. The Corporate Debtor, part of the Rajesh Group, had executed a Debt Term Sheet with Altico Capital India Limited in 2018 for financing projects, including the Kailash Niwas project. A loan facility of Rs. 1,135 crores was to be availed through Non-Convertible Debentures. Vistra ITCL was appointed as the trustee. The Corporate Debtor argued that Altico committed fraud by

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## Facts

On March 1, 2018, Rajesh Cityspaces Private Limited (Corporate Debtor), along with other group entities, executed a Debt Term Sheet with Altico Capital India Limited ('Altico') for financing projects, including Kailash Niwas. The loan facility was for Rs. 1,135 crores through Non-Convertible Debentures. Vistra ITCL was appointed as the trustee. A Debenture Trust Deed was executed on March 19, 2018. Altico was obligated to pay the subscription amount to Rajesh Group within 5 days of a draw-down request. Altico partly rendered financial assistance. Altico issued a Notice of Payment Default on November 7, 2019, for Rs. 1,18,97,478/-. On March 4, 2021, Altico assigned the credit facilities to the Financial Creditor. The Financial Creditor issued a demand letter on August

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

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

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**Reasoning:** The NCLT considered the arguments presented by both the Financial Creditor and the

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**Interpretation:** Section 7 of the IBC provides the mechanism for a financial creditor to trigger

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**Application:** The NCLT found that the Financial Creditor had established the existence of a

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## Parties

- **Judges:** ANIL RAJ C…; Kuldip Kumar…
- **Appellants:** Assets Care and…; Assets Care &…
- **Respondents:** Rajesh Cityspaces…

## Timeline

- **2018-03-01 — Debt Term Sheet…**: The Corporate Debtor and its group entities executed a Debt Term Sheet with Altico…
- **2018-03-19 — Debenture Tru…**: Debenture Trust Deed executed between…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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