NCLT Ahmedabad Admits CIRP Against Areli Commerce, Rejects Financial Hardship Defence In S.7 Case

On 10 June, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) initiated the Corporate Insolvency Resolution Process (CIRP) against Areli Commerce Pvt. Ltd., holding that financial hardship, liquidity constraints and market conditions cannot be used to defeat a Section 7 petition once debt and default are established.

Judicial Member Shammi Khan and Technical Member Sanjeev Sharma rejected the corporate debtor's defence and admitted the petition filed by Standard Capital Markets Ltd. The Bench held:

“The defence of financial hardship, liquidity crunch, market conditions and on-going efforts for revival cannot constitute a valid ground for rejection of a petition under Section 7 of the Code. Once financial debt and default are established, the Adjudicating Authority is required to admit the application.”

Standard Capital Markets Ltd. filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016. It had sanctioned a Smart Credit Line/Revolving Credit Facility of Rs 2 crore to Areli Commerce Pvt. Ltd. in March 2025.

The creditor disbursed Rs 1.52 crore directly to UC Inclusive Credit Pvt. Ltd. to settle the debtor's existing liability. It alleged that Areli Commerce Pvt. Ltd. defaulted on repayment of Rs 1.73 crore as on 15 May 2025 and filed the petition in February 2026.

Areli Commerce Pvt. Ltd. did not dispute the sanction or disbursement of the facility but cited financial difficulties, liquidity crunch, slowdown in startup funding and business disruptions to justify non-payment.

The financial creditor relied on the facility agreement, sanction letter, ledger account, disbursement records, legal notice and a default record from the National E-Governance Services Ltd. (NeSL).

The Tribunal found that the documents established the existence of a financial debt under Section 5(8) of the IBC. It also noted that the debtor admitted the sanction and disbursement, which strengthened the creditor's case. It further accepted the NeSL record of default as reliable evidence under Section 7(3)(a). It held that financial hardship, liquidity issues or adverse market conditions cannot defeat a Section 7 petition once debt and default stand established.

The Bench relied on Supreme Court precedents, including Innoventive Industries v. ICICI Bank, E.S. Krishnamurthy v. Bharath Hi Tech Builders, and M. Suresh Kumar Reddy v. Canara Bank, and reiterated that at the admission stage it must only determine the existence of financial debt and default.

Accordingly, the NCLT admitted the petition, declared a moratorium under Section 14 of the IBC, appointed Varun Anil Chopra as Interim Resolution Professional (IRP), and directed the financial creditor to deposit Rs 3 lakh towards initial CIRP costs.