The NCLAT set aside the impugned order and allowed the appeal, ...

Lenders' appeal allowed against rejection of insolvency plea; NCLAT directs reconsideration of default.

January 15, 2025

Case Laws     IBC     AT

The NCLAT set aside the impugned order and allowed the appeal, holding: i) No fault in the assignment by lenders to Omkara Assets Reconstruction Pvt. Ltd. ii) Proceedings not barred by res judicata. iii) Corporate debtors running profitable hotels, making payments to lenders. iv) Adjudicating authority erred in not considering Cash Management Agreement for finding default. v) Lenders obligated to maintain DSRA amount from loan agreement towards repayment. vi) Corporate debtor disputed default before adjudicating authority. vii) End use certificate not sufficient to reject corporate debtor's claims on use of ECLGS funds by lenders. viii) Adjudicating authority to reconsider default afresh under ECLGS-1, loan agreement after examining relevant materials like CMA, DSRA. ix) No finding of default under ECLGS-2 by adjudicating authority.

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