NCLT Bengaluru Admits Millennium Starch Into CIRP Despite Technical Defects In Insolvency Plea

The National Company Law Tribunal (NCLT) at Bengaluru has admitted a ₹39.19 crore insolvency plea filed by Axis Bank against Millennium Starch India Private Limited, holding that procedural defects in the petition did not prejudice the company and could be cured during the proceedings.

“Even if the defect remained, no prejudice is shown to have occurred to the respondent who has been afforded sufficient opportunity to file reply/objections to the petition and address arguments post service of notice. The objection therefore, has melted on satisfaction and does not jeopardise the stance of respondent on any count.”, it observed.

A coram of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada observed that the scope of inquiry in a plea filed under Section 7 of the Insolvency and Bankruptcy Code is limited to determining whether a financial debt exists and whether default has occurred.

Millennium had availed credit facilities of ₹40 crore under a Multiple Banking Arrangement, comprising an Open Cash Credit Facility of ₹25 crore and a Term Loan Facility of ₹15 crore, and had executed various loan and security documents.

After availing the facilities, Millennium failed to service the loan accounts in accordance with the sanctioned terms, leading to default on February 28, 2024. The account was subsequently classified as a Non-Performing Asset on May 31, 2024.

Axis Bank later issued recall and SARFAESI notices seeking repayment of the outstanding dues, but the amount remained unpaid.

Millennium opposed the petition, contending that it was defective, lacked proper authorization, and that the company remained solvent despite having made substantial repayments.

Rejecting the objections, the Tribunal held that the Bank had established both the existence of financial debt and default through documents placed on record.

The tribunal also reiterated that solvency is not a relevant consideration once default is established.

“However, it is well settled that the test under Section 7 of the Code is not the solvency of the Corporate Debtor but the existence of default. Once default is established, the Adjudicating Authority is required to admit the petition.”

Accordingly, the tribunal admitted the petition, initiated Corporate Insolvency Resolution Process against Millennium Starch India Private Limited, declared moratorium, and appointed Rahul Sudhakar Kavathekar as the Interim Resolution Professional.

For Respondent: K Dushyantha Kumar, PCS