Default In Any Credit Account Leads To NPA Classification; Sufficient To Trigger CIRP U/S 7 IBC: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Sushil Mahadeorao Kochey (Judicial Member) and Prabhat Kumar (Technical Member) held that default in one of several facilities was sufficient to trigger Corporate Insolvency Resolution Process (CIRP) under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal further observed that where the debtor maintains multiple loan accounts, each account carries a separate debt obligation capable of attracting default independent of the others. It held that “the Corporate Debtor was availing credit facilities under five different accounts and each account had an independent maturity period. Even if there was a fresh disbursement in another account on the preceding date, it cannot lead to an inference that the other account could not have been classified as NPA on the next date if such account had been delinquent for the specified period.” Background: HDFC Bank Limited had sanctioned multiple working capital and cash credit facilities to Shree Sant Kripa Appliances Private Limited (Corporate Debtor)- ₹35 crore under a Sanction Letter dated 22 December 2015, and ₹65 crore under a Sanction Letter dated 7 January 2021. Despite renewals through Annual Review and Revision Letters, the borrower failed to repay the amount. The Account was classified as Non-Performing Assets (NPAs). The corporate debtor submitted that since the fresh disbursements of Rs. 10.25 crore were made on 1st Jan 2024, the bank could not have classified the debtor's account as NPA on the next day-2nd Jan 2024. Based on the above, it was submitted that the loan had not yet matured. It was further submitted that all credit facilities formed part of a composite arrangement, therefore default could not be determined account-wise. Findings: The Tribunal rejected the corporate debtor's contentions holding that each credit facility was distinct with its own maturity and repayment schedule. It observed that “the Corporate Debtor was availing credit facilities under five different accounts and each account had an independent maturity period. Even if there was a fresh disbursement in another account on the preceding date, it cannot lead to an inference that the other account could not have been classified as NPA on the next date if such account had been delinquent for the specified period.” The Tribunal further held that a petition under section 7 of the IBC remains maintainable even where there are multiple dates of default as long as the debt in relation to default falling within the limitation period exceeds the threshold limit of Rs. 1 crore under section 4 of the IBC. Accordingly, the Tribunal admitted the petition holding that the debt and default stood established. Case Title: HDFC Bank Limited v. Shree Sant Kripa Appliances Private Limited Case No.: CP (IB) No. 665 of 2025 Date of Order: 30/10/2025 Counsel for Financial Creditor: Adv. Sameer Pandit a/w Adv. Aastik Agarwal (i/b Wadia Ghandy & Co.) Counsel for Corporate Debtor: Adv. Ayush J. Rajani a/w Adv. Keshav Khandelwal (i/b AKR Legal) Click Here To Read/Download The Order

Default In Any Credit Account Leads To NPA Classification; Sufficient To Trigger CIRP U/S 7 IBC: NCLT Mumbai

Mohd Malik Chauhan

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