NCLT Delhi Admits CIRP Against Regal Enterprises, Rejects Solvency Claim Without Evidence

The New Delhi National Company Law Tribunal (NCLT) on 9 July admitted a Corporate Insolvency Resolution Process (CIRP) petition against Regal Enterprises Limited, holding that a financial creditor only needs to establish the existence of debt and default under Section 7 of the Insolvency and Bankruptcy Code (IBC).

President Anupinder Singh Grewal and Technical Member Ravindra Chaturvedi admitted the petition filed by Akkme Food Craft Limited and ordered commencement of CIRP against Regal Enterprises Limited. The Bench held:

“In the absence of any supporting documentary proof, the plea of the Corporate Debtor being a solvent and going concern cannot be accepted merely on the basis of unsubstantiated averments. Accordingly, the plea of the Corporate Debtor being a solvent and going concern cannot be accepted solely on the basis of averments and requires support from cogent material placed on record.”

Akkme Food Craft Limited, which operates cloud kitchens and quick service restaurants, had extended an Inter-Corporate Deposit (ICD) of Rs. 1 crore to Regal Enterprises Limited in July 2025 at an interest rate of 15%. The amount was repayable by 31 January 2026.

Regal Enterprises issued two cheques in February 2026 towards repayment of the deposit. However, both cheques were dishonoured due to insufficient funds. Akkme Food Craft claimed that Regal Enterprises had defaulted on repayment of Rs. 1,05,74,726 and filed a petition under Section 7 of the IBC (which allows a financial creditor to initiate insolvency proceedings against a corporate debtor upon default).

Regal Enterprises opposed the petition, alleging that it was filed to pressurise and coerce the company rather than to facilitate insolvency resolution. It claimed that the company was solvent and functioning as a going concern.

The corporate debtor also argued that the petition was not maintainable as it did not contain a record of default from an Information Utility. It contended that dishonour of cheques alone could not establish default and that the ICD receipts relied upon by Akkme Food Craft were unilateral documents and did not constitute financial debt.

The Tribunal rejected these objections, observing that Section 7 of the IBC requires proof of debt and default. It further noted that Regulation 20(1A) of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 does not make a record of default from an Information Utility the only mode of proving default, and other evidence can also establish the existence of debt and default.

Further, the Bench observed that Regal Enterprises failed to place audited financial statements or any other material to substantiate its claim of solvency. It held that mere assertions that the company was a going concern could not defeat a CIRP petition.

Accordingly, the NCLT admitted the petition, declared a moratorium and appointed Sandeep Agrawal as the Interim Resolution Professional (IRP).

For Applicants: Advocates Mukesh Sukhija and Milind Gautam

For Respondents: Advocates Sumita Kaushal and Shailendra Kumar