30/08/2026
NCLAT IBC 2016 Case Law Judicial Update : May 13, 2026 Vivriti Capital Limited Versus Gensol Electric Vehicles Private Ltd NCLAT Comp. App. (AT) (Ins) No. 1460 of 2025
Brief Facts : The Appellant sanctioned a non-revolving rupee term loan of Rs.5,00,00,000/- to the Respondent. The default was committed by the Corporate Debtor in making payment of the instalment due and a Notice was issued by the Appellant to the Corporate Debtor claiming total amount of Rs.18,68,342/-. As the CD failed to pay, the appellant adjusted the same from the cash collateral. Thereafter, the Appellant issued loan recall notice for the outstanding amount of Rs.3,87,87,657/- as on 05.03.2025. After the\ said loan recall notice, when no repayment was made, Section 7 application was filed by the Appellant. The Adjudicating Authority rejected the application.
Judgement : Hon’ble NCLAT considered the submission of the Ld. Counsel for the Appellant and perused the record. The notice dated 17.04.2025 was part of Section 7 application which mention that default has been committed of payment of Rs.18,68,342/- which was required to be paid on 05.03.2025. The default being committed notice dated 17.04.2025 was issued but no repayment was made. In pursuance of the notice, hence, the amount was recouped from the cash collateral as per the agreement between the parties. Subsequently, on 02.05.2025, loan recall notice was issued by the Financial Creditor giving details of facility agreement and defaults committed by the Financial Creditor.
Total outstanding was mentioned in the loan recall notice including principal and interest accrued. After the loan recall notice when amount was not paid,Section 7 application was filed. In Part-IV ofSection 7 application, the Appellant has given brief facts of the case, details of the facility agreement and the details with regard to default committed. The above detailed pleading in Part-IV clearly mentioned the default including the loan recall notice on 02.05.2025. It was mentioned that default was committed on 05.03.2025 which continues.
The Adjudicating Authority has taken note of the recoupment from cash collateral and has come to conclusion that after recoupment from cash collateral default on 05.03.2025 came to an end. Under the facility agreement which was entered between the parties, the event of default has been provided in clause 14 and consequence of the event of the default are given in para-15.
The cash collateral which was part of security could have very well been adjusted by the Financial Creditor towards the payment of any outstanding dues but recoupment from cash collateral cannot lead to conclusion that no default was committed on the relevant date.
The observation of the Adjudicating Authority that Section 7 application is defective and incomplete cannot be sustained. All relevant pleadings were contained in Part-IV and default was clearly made out. In the facts of the present case, NCLAT viewed that order impugned cannot be sustained. The impugned order rejecting Section 7 application is set aside. The Section 7 application is revived before the Adjudicating Authority for passing a fresh order in accordance with law at an early date. The Adjudicating Authority is directed to pass an appropriate order expeditiously preferably within six months from the date this order is produced.
