Himalayan Mineral Water Private Limited was recently ordered to initiate insolvency proceedings by the Allahabad-based National Company Law Tribunal (NCLT) in the case of Jammu and Kashmir Bank v. Himalayan Mineral Waters Private Limited.
The NCLT issued the order in response to a request from Jammu and Kashmir Bank to initiate insolvency proceedings regarding a ₹50 crore debt owed by Leel Electricals. Himalayan Mineral Water had served as the corporate guarantor for this debt.
The plea was admitted by an NCLT Bench consisting of judicial member Praveen Gupta and technical member Ashish Verma on June 3, and the initiation of the Corporate Insolvency Resolution Process (CIRP) against Himalayan Mineral Water was ordered.
As per the Order of NCLT, “We are satisfied that the Applicant/Financial Creditor (J&K bank) has proved the ‘debt’ and the ‘default’, which is more than the threshold limit of one crore rupees and hence, the application under Section 7 of the Insolvency and Bankruptcy Code is found to be fit for initiation of the CIRP against the Corporate Debtor,” .
According to the NCLT, Leel Electricals failed to repay credit facilities it had obtained from Jammu and Kashmir Bank, leading to its declaration as a Non-Performing Asset in 2019.
As a result of a recent order from the NCLT, Leel Electricals is currently in the process of liquidation.
According to the statement, the outstanding dues as of December 31, 2021, exceeded ₹50 crores.
In the interim, the bank issued a Guarantee Invocation Notice to Himalayan Mineral Water, which demanded that the dues be repaid. The bank submitted a request to the NCLT to initiate CIRP against Himalayan Minter Water after failing to do so. Even if the principal creditor (Leel Electricals) is in liquidation, the bank stated that CIRP can be initiated against the corporate guarantor.
Himalayan Mineral Water argued that the return of the loan facilities could not be demanded by any one bank, since the extension of these facilities was based on agreements with a consortium of twelve banks.
Furthermore, it objected to the bank’s request to commence insolvency proceedings against Himalayan, citing that the bank’s demand against Leel Electricals has already been acknowledged in the current liquidation proceedings against Leel.
The NCLT dismissed these arguments and determined that there was an unequivocal breach of contract by Himalayan Mineral Water.
The NCLT stated, “We are of the considered view that there exists financial debt which is payable and there is a default on the part of the respondent (Himalayan Mineral Water),”.
Consequently, the bank’s appeal was granted, and insolvency proceedings against Himalayan Mineral Water were instituted. Bhoopesh Gupta has been appointed as the interim resolution professional.
On July 9 of 2024, the NCLT will address the issue further.
The Jammu and Kashmir Bank was represented by Advocate Rahul Chaudhary.
Himalayan Mineral Water was represented by Advocate Kiran Bala Agarwal.