NCLT Mumbai Admits Central Bank Of India's ₹44.68 Crore Insolvency Plea Against Deepak Education

On 17 June, the Mumbai Bench of the National Company Law Tribunal (NCLT) admitted a Section 7 petition filed by Central Bank of India against Deepak Education Ltd over a default of Rs. 44.68 crore, thereby initiating the Corporate Insolvency Resolution Process against the company.

Judicial Member Ashish Kalia and Technical Member Sanjiv Dutt admitted the petition, noting that the bank had successfully established the existence of debt and default and that the corporate debtor itself had acknowledged the outstanding liability. The Bench held:

“There is nothing to indicate that the Corporate Debtor has tried to repay the debt and liability as admitted by it after the last repayment in 2016, hence it is in default of the amount as pleaded by the Financial Creditor. Thus we hold that the Financial Creditor has successfully demonstrated and proved the debt and default in this case. It is reiterated that the Corporate Debtor admits the said outstanding debt. Therefore, we are of the considered view that this Application is complete and satisfies all the necessary requirements for admission under Section 7 of the Code.”

The dispute arose from a term loan of Rs. 15 crore sanctioned by Central Bank of India in May 2013. Deepak Education availed the facility and executed the necessary financing and security documents but defaulted on repayment on 31 March 2015. The account was subsequently classified as a non-performing asset.

The bank claimed a total outstanding amount of Rs. 44.68 crore, comprising principal, accrued interest and penal interest after adjusting recoveries. It issued a legal notice in March 2017 and also relied on a default record issued by National E-Governance Services Ltd.

The Tribunal noted that although the company stopped repayments after 20 January 2016, it continued to acknowledge the debt in its audited financial statements. It further observed that the company submitted a one-time settlement (OTS) proposal on 25 January 2023 offering Rs. 5 crore, which also constituted an acknowledgment of debt for limitation purposes. It held:

“Further, it is observed that the CD proposed an OTS dated 25.01.2023 to the Financial Creditor which also can be construed as an Acknowledgment of Debt. Therefore, it cannot be said that the present Application is not filed within the limitation period.”

The Bench also recorded that despite being granted several opportunities to appear, file a reply and contest the proceedings on merits, the corporate debtor failed to do so and was eventually proceeded against ex parte.

Holding that all requirements under Section 7 of the Insolvency and Bankruptcy Code stood satisfied, the Tribunal admitted the petition, imposed a moratorium under Section 14 and appointed Anil Kashi Drolia as the Interim Resolution Professional to carry out statutory functions under the Code.

Accordingly, the NCLT admitted the petition.