JSA advised and represented Indiabulls Housing Finance Limited in four separate petitions under Section 7 of the Insolvency and Bankruptcy Code 2016 (“Code”) against the Mantri Group of companies, namely, Mantri Developers Private Limited, Mantri Techzone Private Limited, Shore Dwellings Private Limited and Mantri Infrastructure Private Limited claiming a total default in excess of Rs. 1,300 Crores. The petitions were heard and admitted by the National Company Law Tribunal at Bangalore (“NCLT”). JSA appeared alongside eminent senior counsels of the Karnataka bar namely Mr. C.K. Nandakumar and Mr. Dhyan Chinappa in submitting its arguments before the tribunal.
The NCLT considered various objections raised by the Corporate Debtor in the above matters and ultimately held in favour of the Financial Creditor while admitting the petitions. The Corporate Debtors had interalia contended that there exists an arbitration clause in the loan agreements executed between the parties which would act as a bar to the insolvency proceedings initiated against them. JSA relied on the dictum laid down by the Hon’ble Supreme Court of India in Tata Consultancy Services Limited vs. SK Wheels Private Limited and Indus Biotech Private Limited and Kotak India Venture (Offshore) Fund & Ors. in submitting that firstly, an existence of arbitration clause in an agreement does not oust the jurisdiction of the NCLT in an insolvency proceeding and that the NCLT is duty bound to decide on the admission of the petition under Section 7 of the Code before considering any application for reference of the matter to arbitration.
The Corporate Debtors had also contended that the above petitions ought not to be admitted till the conclusion of the ongoing settlement discussions between the parties. JSA successfully contended that any settlement discussions between the parties are not a bar to the admission of the insolvency petition and relied on the judgement of Hon’ble Supreme Court of India in E.S. Krishnamurthy vs. Bharat Hi-tecch Builders Private Limited in submitting that the mere initiation of a settlement process cannot be ground for dismissing a Section 7 petition.
While accepting the above arguments and submissions of JSA amongst others, the NCLT was pleased to admit all the petitions against the Mantri Group of Companies in view of Mantri’s financial debt and clear default thereof to Indiabulls for an amount way above the threshold of Rs.1 Crore.
Our Dispute Team Comprised Lead Partner – Dheeraj Nair, Partner – Prasanth V G, Senior Associate – Vishrutyi Sahni, Associate – Ridhima Sharma, Associate – Pratik Joshi, and Junior Associate – Ayyanna Sharanappa.