# In the matter of West Face Hospitality and Management Pvt. Ltd.

> NCLT judgment dated 2024-04-05. Citation: TCN-2024-NCLT-01799. Bank of India filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to…

- **Court:** NCLT
- **Order date:** 5 Apr 2024
- **Citation:** TCN-2024-NCLT-01799
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/west-face-hospitality-and-management-pvt-ltd-13a8aac5

## Summary

### Background

Bank of India filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. West Face Hospitality and Management Pvt. Ltd due to an alleged default of Rs 26,29,04,506.74 as of May 26, 2019. The Corporate Debtor had approached the Financial Creditor for a term loan of Rs. 15 Crores for the construction of a boutique hotel. A sanction letter and hypothecation cum loan agreement were executed in May 2010, creating an equitable mortgage. The Corporate Debtor defaulted on the loan, leading to the account being classified as a Non-Performing Asset (NPA) in July 2013. The Financial Creditor then proceeded under the SARFAESI Act, 2002, to take possession of the secured asset. The Corporate

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## Facts

Bank of India extended a term loan of Rs. 15 Crores to M/s. West Face Hospitality and Management Pvt. Ltd for the construction of a boutique hotel, with a sanction letter and hypothecation cum loan agreement executed in May 2010, creating an equitable mortgage on the property. The Corporate Debtor defaulted on the repayment, leading to the loan account being classified as NPA on July 31, 2013. The Financial Creditor initiated proceedings under the SARFAESI Act, 2002, to take possession of the secured asset. The Corporate Debtor challenged the possession notice, and the DRT initially restrained the bank from taking possession, subject to the Corporate Debtor depositing Rs. 5 crores in installments. Several OTS proposals were exchanged between December 2015 and April

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the IBC is maintainable without a valid Board Resolution …

**Ratio:** A Board Resolution authorizing the filing of the application is necessary for a Section 7

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**Reasoning:** The Adjudicating Authority found that the Financial Creditor submitted a Board Resolution

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**Interpretation:** The presence of a valid Board Resolution authorizing the filing of the Section

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**Application:** The Adjudicating Authority determined that the Financial Creditor had provided

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## Parties

- **Judges:** SHRI. P.S.N.…; SHRI. RAHUL…
- **Appellants:** M/s. BANK O…
- **Respondents:** M/S WEST FACE…

## Timeline

- **2010-05-12 — Loan Agre…**: Sanction Letter and Hypothecation…
- **2013-07-31 — NPA Classif…**: Term loan account classified as…

## 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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