Karnataka High Court Stays Insolvency Proceedings Against Mantri Developers Ltd

The High Court of Karnataka, Bengaluru Bench, comprising of Justice M. Nagaprasanna, while adjudicating a petition filed in Mr. Sushil Mantri v The Registrar (NCLT Bengaluru) & Ors. has stayed the Corporate Insolvency Resolution Process (“CIRP”) initiated against Mantri Developers Pvt. Ltd. by the National Company Law Tribunal, Bengaluru.

BACKGROUND FACTS

Mantri Developers Pvt. Ltd. (“Corporate Debtor”) is a Mr. Sushil Mantri promoted company and a part of Mantri Group of Companies. The Corporate Debtor is engaged in the business of real estate development and has various residential, retail and hospitality projects in Bengaluru, Hyderabad, Pune and Chennai.

The Corporate Debtor had approached Indiabulls Housing Finance Limited (“Financial Creditor”) for availing loan facility for development and execution of Projects, mainly ‘Mantri Centrium’ and ‘Mantri Webcity’. The Financial Creditor sanctioned loan to the Corporate Debtor aggregating to Rs.579,20,00,290/-. The Corporate Debtor defaulted in repayment of the loan facilities since the project timelines were affected due to various reasons.

Therefore, the Financial Creditor filed a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC”) before the National Company Law Tribunal (“NCLT”), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, over a default of Rs. 456,68,73,538/-.

On 28.03.2023 the NCLT Bench admitted the petition under Section 7 of IBC and initiated CIRP against the Corporate Debtor. Mr. Ahsan Ahmad has been appointed as the Interim Resolution Professional (“IRP”).

Mr. Sushil Mantri filed an appeal against the order dated 28.03.2023 before the National Company Law Appellate Tribunal (“NCLAT”) on 30.03.2023, which is pending adjudication. In the meanwhile, he also approached the High Court of Karnataka by way of a writ petition seeking stay on the CIRP proceedings of the Corporate Debtor. It was contended that the Resolution Professional will take over the affairs of the Corporate Debtor if it is not protected till the NCLAT takes up the issue.

The High Court of Karnataka has imposed an interim stay on the CIRP of Mantri Developers Ltd. for a period of three weeks. The next date of hearing is 20.04.2023.

Case Title: Mr. Sushil Mantri v The Registrar (NCLT Bengaluru) & Ors.

Case No.: W.P. No. 7706/2023

Counsel For the Petitioner: Sri. K. Shashikiran Shetty (Sr. Adv.)

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