The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted JM Financial Trustee Company’s insolvency resolution plea against Kumar Urban Development and appointed Atul Jain as the interim resolution professional for the Pune-based realty developer.
According to the order delivered by the bankruptcy court, the real estate company defaulted on the repayment of credit facilities of more than Rs 432 crore.
A division bench of the tribunal headed by judicial member HV Subba Rao and technical member Chandra Bhan Singh passed the order on April 28. The order was uploaded on its website on Thursday.
Meanwhile, Lalit Kumar Jain, promoter of Kumar Urban Development, has approached the Bombay High Court against the order and said he was inclined to challenge the ruling in the National Company Law Appellate Tribunal (NCLAT). Jain has sought a stay on the NCLT order till he approached the NCLAT.
As per the high court’s website, he approached the court on May 3, through law firm Crawford Bayley & Co. Advocate Rohit Gupta along with law firm Juris Corp is representing JM Financial Trustee, while senior counsel Vikram Nankani is representing Lalit Kumar Jain in the high court.
This is the second round of litigation between both parties. In 2019, JM Financial Trustee Company had filed a petition against the developer. They entered into consent terms in December that year for full and final settlement of the amounts claimed in the petition. JM Financial Trustee Company then withdrew the petition, after the company failed to repay the dues as per the consent terms, says the order.
The first event of default under the consent terms took place on December 24, 2019, when the developer failed to execute the escrow account agreement. The next event of default occurred on January 9, 2020, when the execution of the security documents was not made by the developer in favour of the financial creditor. It also defaulted on the payment of the first instalment of settlement on January 31, 2020.
The developer had alleged that the financial creditor had not transferred certain securities after the payment of the first instalment. Therefore, JM Financial has breached the consent terms and therefore the developer was not liable to pay the subsequent amount, it claimed before the NCLT.
However, the NCLT bench stated that it had absolute clarity that the defence which had been taken up by the developer was untenable. The borrower had started to renegade the consent terms between the parties, resulting in an event of default even before the first instalment was due.
