Case Overview
The National Company Law Tribunal (NCLT) New Delhi Bench delivered two interconnected orders concerning DCB Bank Limited (Financial Creditor) and M/s Genesis Infratech Pvt Ltd (Corporate Debtor/Corporate Guarantor).
The matter originated from a Section 7 petition (CP IB/720/ND/2024) filed by DCB Bank on 17.10.2024 seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Genesis Infratech as corporate guarantor for loans extended to the principal borrower, M/s Swastik Home Build Pvt Ltd. The petition was initially disposed of on 30.01.2025 due to ongoing CIRP against the principal borrower but was restored on 08.01.2026 after that CIRP was closed.
Concurrently, Genesis Infratech filed I.A. No. 2418/ND/2026 under Section 65 of the Insolvency and Bankruptcy Code, 2016, seeking dismissal of the Section 7 petition and imposition of penalties, alleging that DCB Bank initiated proceedings maliciously as a coercive recovery mechanism rather than for legitimate insolvency resolution.
The financial debt arose from three loan facilities sanctioned to Swastik Home Build Pvt Ltd: Term Loan-I of ₹12.50 crores (sanctioned 28.03.2016, revised 27.06.2016), Term Loan-II of ₹1.00 crore (sanctioned 28.03.2016, revised 27.06.2016), and a GECL Loan of ₹1.46 crores (sanctioned 11.01.2021). Genesis Infratech executed a Continuing Corporate Guarantee on 11.01.2021 for ₹7,84,00,000. Default occurred on 01.03.2023, with total outstanding claimed as ₹9,90,440,308.69 as of the petition filing date.
DCB Bank issued a Legal Notice dated 08.04.2024 demanding ₹7,54,51,270.99 and also filed Original Application No. 315 of 2024 before DRT-I, Delhi for recovery of ₹7,15,18,836.00 as on 24.04.2024. The bank recorded the debts with the National E-Governance Services Limited (NeSL) information utility.
Genesis Infratech raised multiple defenses: (1) lack of proper authorization for filing the petition as only a general power of attorney was provided; (2) failure to terminate the loan facility as required by Master General Terms Agreement; (3) non-compliance with RBI norms for NPA classification; (4) failure to serve demand notice or invoke guarantee as required by the guarantee deed; (5) the petition being contrary to the object of IBC as a recovery mechanism; and (6) the company being solvent and profitable.
The Tribunal thoroughly examined each contention, referencing multiple Supreme Court and NCLAT judgments including Innoventive Industries Ltd. vs. ICICI Bank Ltd., Rajendra Narottamdas Sheth vs. Chandra Prakash Jain, and Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal.
Final Outcome
The NCLT dismissed Genesis Infratech's Section 65 application (I.A. No. 2418/ND/2026), finding no evidence of fraudulent or malicious intent in the initiation of proceedings. The Tribunal admitted DCB Bank's Section 7 petition (CP IB/720/ND/2024) against Genesis Infratech, satisfied that a financial debt exists and default has occurred.
The Court appointed Mr. Ajay Gupta (Registration No. IBBI/IPA-001/IP-P00140/2017-2018/10304) as Interim Resolution Professional and declared moratorium under Section 14 of the IBC. DCB Bank was directed to deposit ₹2 lakhs with the IRP to meet initial expenses. The moratorium prohibits: institution/continuation of suits against the corporate debtor; transfer of assets; any action to enforce security interest; and recovery of property by owners/lessors.
Topics: Corporate Guarantee Insolvency, Section 7 Admission, NCLT Proceedings