The right to initiate CIRP against Corporate Debtor occurs only when a default occurs – Mr. Kishor Prakash Lunawat Vs. M/s. GDS Buildcon Pvt. Ltd. – NCLT Mumbai Bench
The Adjudicating Authority observed that this is a fit case for dismissal of the above Company Petition. It is a settled position that the right to initiate CIRP process against the Corporate Debtor occurs only when a default occurs. However, in the present case the Petitioners have infact failed to show that there was any default or that there was any financial debt owned by the Corporate Debtor much less their claim of being Financial Creditors. Thus, perusal of all the averments and documents on record would show the FC Nos. 2 and 3 have also not produced any agreement/ document to show that there was a financial debt. The entire Petition is silent about the date on which the alleged default occurred or the manner in which the alleged default has occurred as the Petitioner has not placed on record any document/ agreement showing the understanding or the alleged transaction between the parties of advancing any loan to the Corporate Debtor.
