NCLT Indore Admits Hinduja Leyland Finance's ₹117.28 Crore Insolvency Plea Against Owais Metal

A Bench comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta initiated the corporate insolvency resolution process (CIRP), observing:

“The mere pendency of the said writ petition, particularly when the Petitioner is not a party thereto and its debt is not the subject matter of those proceedings, cannot defeat or postpone the Petitioner's right to proceed under the Code..”

Hinduja Leyland Finance Ltd, a non-banking financial company, had sanctioned eight interconnected credit facilities in 2024 to Owais Metal & Mineral Processing Ltd and associated group entities, including SMO Ferro Alloys Private Limited and Saiyyed Akhtar Ali (Firm).

The aggregate sanctioned amount was Rs. 110 crore, with disbursements made through banking channels. The facilities were secured by mortgages of immovable properties, execution of loan agreements, hypothecation deeds and Demand Promissory Notes.

The account was classified as a Non-Performing Asset (NPA) on 5 August 2025 after persistent defaults. Hinduja Leyland Finance Ltd issued a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002 (SARFAESI Act), which allows a secured creditor to demand repayment of dues from a borrower in default, on 18 August 2025, followed by a foreclosure demand. The outstanding liability was computed at Rs. 117.28 crore as of October 2025.

Hinduja Leyland Finance Ltd contended that Owais Metal & Mineral Processing Ltd's own reply acknowledged the sanction, disbursement and securing of the loan facility and the subsequent non-payment of dues.

It submitted that the subsequent revocation of the auction certificate by the State Government of Rajasthan and the pendency of writ proceedings before the Rajasthan High Court did not affect the company's contractual liability. Further, it argued that a corporate entity could not legitimately claim operational viability when its management had actively diverted Rs. 100 crore of its working capital.

Owais Metal & Mineral Processing Ltd argued that the loan was linked to payment for a mining block allocation in Rajasthan, for which Rs. 100 crore had been deposited by a co-borrower. The auction certificate was subsequently revoked, leading to writ proceedings before the Rajasthan High Court. It therefore contended that the default was temporary and contingent on the outcome of those proceedings.

The company further argued that it remained viable and operational, with audited balance sheets showing solvency. It submitted that the default was not caused by financial mismanagement but by the alleged illegal termination by the State Government, which was an extraneous factor. It also pointed out inconsistencies in the dates of default stated in the petition.

The Bench noted that the existence of financial debt and default had been established, with the corporate debtor's own admission of Rs. 15 crore being sufficient to cross the statutory threshold under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), which enables a financial creditor to initiate CIRP against a corporate debtor upon default. It held:

“Rs. 15 crore is more than fifteen times the threshold of Rs. 1,00,00,000/- prescribed under Section 7 does not require this Tribunal to arrive at a final, rupee-precise determination of the entire claim before admitting an application; that exercise is properly one for the Interim Resolution Professional/Resolution Professional….”

Further, the Tribunal noted that inconsistencies in the dates of default did not negate the liability, as the default clearly preceded the NPA classification and the petition was within limitation. It also held that the absence of an Information Utility record did not render the petition incomplete, since the default was evidenced by documents and admissions by the corporate debtor.

Accordingly, the NCLT admitted the petition, initiated CIRP against Owais Metal & Mineral Processing Ltd and declared a moratorium under Section 14 of the IBC. Rajesh Lohia was appointed as the Interim Resolution Professional.

For the Applicants: Advocates Shashwat Seth and Paritosh Seth

For the Respondents: Advocates Vivek Dala and Khushi Patel,