NCLT admits Mantri Developers for insolvency

The National Company Law Tribunal (NCLT) in Bengaluru has admitted Mantri Developers Pvt. Ltd., a Bengaluru-based real estate firm, into the insolvency process and appointed Ahsan Ahmad as the insolvency resolution professional (IRP) to oversee the proceedings.

The decision follows an application by Indiabulls Housing Finance Ltd, which claimed the developer defaulted on dues exceeding Rs 456.68 crore ($6.2 million), including principal and interest.

"The corporate debtor (Mantri Developers) has neither disputed the claim nor denied the agreements entered into between the parties," said a division bench led by judicial member T Krishnavalli, and a technical member Manoj Kumar Dubey, in its order of March 28.

Indiabulls Housing Finance had initially sanctioned an aggregate loan of Rs 579 crore ($7.8 million) to Mantri Developers Pvt. Ltd., with the disbursed amount totalling about Rs 574 crore ($7.7 million). The real estate firm defaulted on its loan obligations on January 1, 2022.

Mantri Developers did not respond to an email shared by ET till the press time.

Before the National Company Law Tribunal's (NCLT) decision, Mantri Developers argued through its counsel, that delays in loan disbursement by Indiabulls Housing Finance had severely affected project timelines and caused cash flow issues.

The developer also claimed the financial creditor had provided loans not only to Mantri Developers but also to its promoter, Sushil Mantri, and Mantri Castles Pvt. Ltd., who acted as co-borrowers.

However, the lender filed the insolvency proceedings solely against Mantri Developers and not against the co-borrowers.

Mantri Developers further argued that the loan agreement between the parties contained an arbitration clause, but Indiabulls Housing Finance bypassed it, filing the proceedings with the tribunal prematurely.

In response, the lender stated that there was no "dispute" about Mantri Developers' default on outstanding dues, adding that the developer's offered settlement constituted an admission of liability, leaving no "dispute" for arbitration.

The NCLT favoured the lender noting that Section 238 of the Insolvency & Bankruptcy Code (IBC) takes precedence over the Arbitration and Conciliation Act of 1996.

According to the latest data from the Insolvency & Bankruptcy Board of India (IBBI), 6,199 companies were admitted under the Corporate Insolvency Resolution Process (CIRP) as of the end of September, with 21% of these companies belonging to the real estate sector. Recently admitted realty firms include Rajesh Landmark Projects, Marvel Realtors & Developers, and Satra Properties.