Case Overview

The application was filed on 03 February 2025 by NRS Projects Private Limited (Corporate Identification Number: U45201GJ2011PTC067426) against Omshivay Builders LLP (Identification Number: ACC-6808) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner claimed a financial debt of ₹6,65,50,684.93 (including interest) with the date of default stated as 05 June 2024.

The debt originated from a work order dated 25 January 2016 where NRS Projects was awarded construction work for the "Silvernest-II" project at Sevasi/Ajwa Road, Vadodara. The petitioner deposited ₹5,00,00,000 as security deposit with the respondent. According to the work order terms, Omshivay Builders was required to remove encroachments and obtain development permissions, which they allegedly failed to fulfill despite repeated communications.

The petitioner discovered through property records that the subject land had been sold to a third party on 07 April 2023. Consequently, a recall notice was issued on 05 June 2024 seeking refund of the security deposit with 18% annual interest. The respondent acknowledged liability through reply dated 28 June 2024 but expressed inability to repay due to financial distress.

A significant complicating factor was that Mr. Nimit Rasiklal Sangani, director of the petitioner company, was also a designated partner in the respondent LLP from 28 August 2023 to 24 April 2024, holding 35% share. He had previously been a partner in the erstwhile partnership firm "Om Shiv Builders" since 2012 before its conversion to Omshivay Builders LLP on 28 August 2023.

The Chairman of the Monitoring Committee of NRS Projects (which was under a resolution plan approved on 30 August 2022) opposed the petition, contending it was filed without proper authorization and during implementation of the resolution plan.

Tribunal's Observations and Reasoning

The tribunal raised serious concerns about the bona fides of the proceedings, noting:

  • The alleged debt originated in 2015-16 but no meaningful recovery action was taken for nearly eight years
  • Mr. Nimit Sangani's dual role in both entities created conflict of interest
  • The recall notice and acknowledgment of liability occurred immediately after Mr. Sangani ceased as designated partner of the respondent
  • All correspondence was shown as "hand delivered" with no email or postal proof
  • The respondent's financial statements as of 31 July 2023 showed no accounting of the ₹5 crore security deposit
  • The timing of the petition raised questions about its genuine purpose

The tribunal referenced Supreme Court judgments in Swiss Ribbons, Anjani Technoplast, and Phoenix ARC cases, emphasizing that the IBC is not a debt recovery mechanism and should not be invoked for purposes inconsistent with its objectives.

Final Outcome

The National Company Law Tribunal, Ahmedabad dismissed CP (IB) No.113/AHM/2025, rejecting the application for initiation of Corporate Insolvency Resolution Process against Omshivay Builders LLP. The tribunal concluded that the circumstances raised serious doubts about the bona fides of the invocation of insolvency jurisdiction and that the petition did not represent a genuine attempt at insolvency resolution consistent with the objectives of the Insolvency and Bankruptcy Code, 2016.

Topics: Insolvency Proceedings, Corporate Debt Dispute, Conflict of Interest