The National Company Law Tribunal Mumbai bench has ordered the initiation of corporate insolvency process against DS Kulkarni Developers Limited after a petition by Bank of Maharashtra for a default on a debt of Rs. 119.48 crore by the company.
After the NCLT appointed an interim resolution professional it came as a public announcement for the creditors, fixed deposit (FD) holders and home buyers in DSKDL projects to submit a claim of their proofs before October 9, 2019.
The Insolvency and Bankruptcy Code was passed in the year 2016. It serves as the sole regulatory framework for insolvency and bankruptcy in the country and the Code lays down a certain time period for the insolvency and bankruptcy proceedings for both individuals and corporate bodies.
After an order dated 26 September 2019 by a two-member NCLT bench comprising a judicial member VP Singh and a technical member Rajesh Singh, the company was placed under a moratorium putting a stay on all suits against the company, either ongoing or pending, before any court in the country. The company was also prohibited from making any transfers or disposing of any of its assets till the resolution process is completed or till the time the NCLT bench approves a plan for resolution for the company under the Insolvency and Bankruptcy Code or till the time an order is passed for the liquidation of the company.
The public prosecutor Pravin Chavan said that the insolvency is basically civil in nature and it would not affect any criminal proceedings against the company. The insolvency proceeding is just aimed at getting the claims of creditors settled.
However, one of the lawyers representing DSKDL in the Pune court said that the insolvency would instead have an overriding effect on all the cases against DSKDL as far as the assets of the company is concerned.
Bank of Maharashtra had sanctioned a loan of Rs. 199.48 crore to DSKDL on February 24, 2016. On July 24, 2017, the bank declared DSKDL as a non-performing asset (NPO) and sent a notice to the company initiating a recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security of Interest Act 2002.