NCLT admits insolvency plea against Nirmal Lifestyle Kalyan

A bankruptcy court in Mumbai has admitted property developer Nirmal Lifestyle Kalyan Pvt Ltd under the Corporate Insolvency Resolution Process (CIRP) following a plea filed by Srei Equipment Finance Ltd.
Kolkata-based Srei Equipment Finance Ltd had approached the Mumbai bench of the National Company Law Tribunal (NCLT) after Nirmal Lifestyle Kalyan, an affiliate of Mumbai-based Nirmal Lifestyle Ltd, defaulted on its dues worth around Rs 84 crore.

Last year in October, the Reserve Bank of India (RBI) had superseded the board of Srei Equipment Finance Ltd and its affiliate Srei Infrastructure Finance due to governance concerns and default; and had initiated bankruptcy proceedings against these companies.

Srei Equipment Finance had disbursed over Rs 84.23 crore loan to Nirmal Lifestyle Kalyan in August 2019. The developer had defaulted on this loan in February 2020 and the total dues claimed by the financial creditor stand at Rs 99.74 crore as on September 2020 including the principal, overdue charges and interest thereon.

On Thursday, the division bench of judicial member Kishore Vemulapalli and a technical member Rajesh Sharma passed the order after hearing arguments from each side.

“We have challenged the said order and are looking to settle the dues later this week,” said a spokesperson of the Mumbai-based developer.

Advocate Rohan Agrawal and Darshit Dave of AVP Partners appeared for Srei Equipment Finance, while Nirmal Lifestyle Kalyan was represented by senior advocate Gaurav Joshi and Ashok Paranjpe, managing partner of law firm MDP & Partners.

Earlier, in February, the tribunal had allowed the withdrawal of insolvency proceedings against real estate development firm Nirmal Lifestyle and had also lifted a moratorium on the company. The developer’s financial creditor SREI Equipment Finance and a homebuyer had separately opposed the withdrawal of insolvency proceedings against the company.

The Mumbai bench of the NCLT had admitted the company under the CIRP last year based on a petition filed by IDBI Trusteeship Services, on behalf of Altico Capital, after the company defaulted on its dues worth Rs 286 crore.