# In the matter of Rite Developers Private Limited

> NCLT judgment dated 2023-08-25. Citation: TCN-2023-NCLT-01921. Piramal Capital & Housing Finance Limited filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 25 Aug 2023
- **Citation:** TCN-2023-NCLT-01921
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/rite-developers-private-limited-a600d681

## Summary

### Background

Piramal Capital & Housing Finance Limited filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Rite Developers Private Limited. The financial creditor claimed default on a loan agreement where the corporate debtor failed to meet its monthly interest obligations. The corporate debtor argued against the petition, citing multiple dates of default and claiming the petition was an attempt to circumvent Section 10A of the Code. The financial creditor argued that the default exceeded the minimum threshold and the application was within the limitation period.

## Facts

Piramal Capital & Housing Finance Limited (Financial Creditor) filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Rite Developers Private Limited (Corporate Debtor). The Financial Creditor had sanctioned a Term Loan of Rs.60 Crores to the Corporate Debtor, with Rite Builtec Private Limited as Co-borrower. The loan agreement was executed on 06.06.2018, and a total sum of INR 52,25,00,000 was disbursed in tranches. The Corporate Debtor defaulted on its monthly interest obligations starting in June 2018. The Financial Creditor issued a recall notice on 28.08.2020 and a notice under Section 13(2) of the SARFAESI Act on 24.09.2020. The Corporate Debtor requested further

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency & Bankruptcy Code, 2016, for …

**Ratio:** Section 7 of the Insolvency & Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The court considered the loan agreement, the default dates, and the arguments presented

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

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**Application:** The court applied Section 7 to the facts of the case and found that the

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## Parties

- **Judges:** Prabhat…; KISHORE VEMULAPALL…
- **Appellants:** PIRAMAL CAPITAL &…
- **Respondents:** Rite Developers…

## Timeline

- **2018-06-01 — Sanction…**: Financial Creditor sanctioned a Term Loan of…
- **2018-06-06 — Loan Agre…**: Loan Agreement executed between 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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