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

> NCLT judgment dated 2024-04-05. Citation: TCN-2024-NCLT-01816. 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-01816
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/west-face-hospitality-and-management-pvt-ltd-89563000

## 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 for a default of Rs 26,29,04,506.74 as of 26.05.2019. 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 Debtor

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## Facts

The Corporate Debtor, M/s West Face Hospitality and Management Pvt. Ltd, approached the Financial Creditor, Bank of India, for a term loan of Rs. 15 Crores to construct a boutique hotel. A sanction letter and hypothecation cum loan agreement were executed on May 12, 2010, creating an equitable mortgage on the property located at 17A, North West Avenue, West Punjabi Bagh, New Delhi. The Corporate Debtor defaulted on the repayment of the term loan, leading to the account being classified as a Non-Performing Asset (NPA) on July 31, 2013. The Financial Creditor initiated proceedings under the SARFAESI Act, 2002, to take possession of the secured asset. A possession notice was issued, which was challenged by the Corporate Debtor and a third party. The DRT initially

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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 valid Board Resolution authorizing the filing of the application is essential for the

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

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**Interpretation:** The court interpreted that a valid Board Resolution is a necessary prerequisite

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**Application:** In this case, the Adjudicating Authority determined that the Financial Creditor

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## Parties

- **Judges:** SHRI. P.S.N.…; SHRI. RAHUL…
- **Appellants:** Bank of…
- **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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