NCLT Ahmedabad Slaps ₹2 Lakh Cost on Dharmadev Infra Director, Admits ₹20.97 Crore Insolvency Plea

Calling it a “counterblast” and an abuse of process, the National Company Law Tribunal (NCLT) Ahmedabad has imposed ₹2,00,000 in personal costs on a director of Dharmadev Infrastructure Limited while admitting an insolvency petition over dues of ₹20,97,43,678.

A coram of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma dismissed an application filed under Sections 60(5) and 65 of the Insolvency and Bankruptcy Code, holding that no ingredient of fraudulent or malicious initiation of insolvency proceedings was established.

“It is only a counterblast to the Section 7 Company Petition as no ingredient of fraudulent or malicious initiation of proceedings is established and is liable to be dismissed with exemplary cost personally imposing on the Applicant Director,” the tribunal observed, while imposing costs on director Kanaklataben Umangkumar Thakkar.

The Section 7 petition was filed by financial creditor UG Fincon Advisors LLP in relation to a loan of Rs. 4 crore advanced on June 22, 2017. The loan carried interest at 18% per annum and was secured by personal guarantees and registered mortgage deeds.

The Tribunal recorded that the corporate debtor acknowledged its liability through consent terms executed on September 25, 2024. Under the settlement, five cheques were issued towards repayment. All five were dishonoured between October 24, 2024 and February 1, 2025. The last cheque dated January 25, 2025 was returned unpaid on February 1, 2025.

An arbitral award dated March 12, 2025 further reaffirmed the liability. The total outstanding amount stood at Rs. 20,97,43,678 as on March 31, 2025.

Rejecting the corporate debtor's contention that the petition was a recovery action, the Bench reiterated that once financial debt and default are established, admission under Section 7 is mandatory. It held that pendency of arbitration, execution of consent terms, or availability of alternate remedies does not bar initiation of the Corporate Insolvency Resolution Process.

On limitation, the Tribunal held that acknowledgments of debt and the dishonour of cheques extended the limitation period. It treated February 1, 2025, the date of dishonour of the last cheque, as the operative date of default.

Holding that the Section 65 plea merely sought to re-agitate issues relating to limitation and the nature of debt that had already been addressed, the Bench said the application amounted to abuse of process and warranted deterrent costs.

Accordingly, the tribunal admitted the petition, declared a moratorium under Section 14 of the Code, and appointed an Interim Resolution Professional to take charge of the corporate debtor's affairs.

For Applicant: Advocate Tarak Damani

For Respondent: Senior Advocate Saurabh Soparkar, with Advocate Arjun Sheth