The National Company Law Tribunal (NCLT) has appointed Rajesh Samson of Deloitte Touche Tohmastu India LLP as the interim resolution professional (IRP) in the case of Amrapali Silicon City Pvt Ltd. The IRP will invite claims from creditors to the company and prepare a resolution plan within the timeframe stipulated under the Insolvency and Bankruptcy Code, 2016 (IBC).
The NCLT had on Monday admitted an application by Bank of Baroda for initiation of corporate insolvency resolution process (CIRP) against defaulting borrower Amrapali Silicon City. The order by the NCLT’s Principal Bench in Delhi is likely to affect thousands of home buyers as the builder Amrapali Silicon City is yet to construct and deliver 4,000 flats.
Amrapali Silicon City has defaulted on total repayment of Rs 71.15 crore, which comprise Rs 59.38 crore of principal overdue and Rs 11.77 crore of interest and penal interest. The bench, comprising Chief Justice MM Kumar and Member (Technical) Deepa Krishnan rejected arguments given by Amrapali Silicon City opposing the admission of the application.
Amrapali Silicon City told the bench said that Bank of Baroda, which is the lead bank of the consortium of lenders, cannot individually enforce any right or obligation of the term loan agreement. The application even otherwise is incomplete and the same is liable to be rejected, the company said.
But the Bench dismissed the opposition arguing that the “Explanation to section 7 (1) clarifies that for the purposes of Section 7, a default includes a default in respect of financial debt, owed not only to the applicant-financial creditor but to any other financial creditor of the Corporate Debt. Moreover, no other financial creditor has come to the forefront to oppose the application”.
Bank of Baroda had filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to trigger CIRP in the matter of Amrapali Silicon City. Under Section 7 of the IBC, a financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process.
Bank of Baroda is the lead bank of the consortium comprising Oriental Bank of Commerce and Bank of Maharashtra as the other lenders, which signed a term loan agreement with Amrapali Silicon City on 25 February 2012.
The consortium of lenders sanctioned a loan of Rs 100 crore to Amrapali Silicon City, out of which Rs 96.88 crore was provided by lead banker Bank of Baroda. Amrapali Silicon City defaulted on term loan in March 2016. Admitting the application, the bench also rejected the corporate debtor’s argument disputing the amount of Rs 71.15 crore in default as “wholly arbitrary”.
Amrapali Silicon City said it is to handover possession of 900 flats in 2018 and another 900 flats in 2019 and the remaining 2200 flats shall be constructed and delivered by 2021. Amrapali Silicon City contended that the delay has been caused on account of the April 2015 order of the National Green Tribunal banning construction activity in the area.