NCLT Initiates Insolvency Proceedings Against Himalayan Mineral Water Over ₹50 Cr Debt

NCLT Initiates Insolvency Proceedings Against Himalayan Mineral Water Over ₹50 Cr Debt

The National Company Law Tribunal (NCLT) in Allahabad recently issued an order to commence insolvency proceedings against Himalayan Mineral Water Private Limited.

This decision came in response to a petition filed by Jammu and Kashmir Bank, which sought to initiate insolvency proceedings concerning a ₹50 crore debt owed by Leel Electricals. Himalayan Mineral Water had acted as the corporate guarantor for this debt.

On June 3, a bench comprising judicial member Praveen Gupta and Technical Member Ashish Verma at the NCLT admitted the petition and directed the initiation of the Corporate Insolvency Resolution Process (CIRP) against Himalayan Mineral Water.

"We are satisfied that the applicant/financial creditor (J&K Bank) has proved the 'debt' and the 'default', which are 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 the initiation of the CIRP against the corporate debtor," the order stated.

The NCLT heard that Leel Electricals defaulted on its credit facilities from Jammu and Kashmir Bank, leading to its classification as a non-performing asset in 2019. Subsequently, following an NCLT order in 2021, Leel Electricals entered into liquidation. By December 31, 2021, outstanding dues exceeded ₹50 crores.

Jammu and Kashmir Bank then issued a Guarantee Invocation Notice to Himalayan Mineral Water for repayment of these dues. Upon non-compliance, the bank sought to initiate the Corporate Insolvency Resolution Process (CIRP) against Himalayan Mineral Water before the NCLT. The bank argued that CIRP could be initiated against the corporate guarantor, even if the principal borrower (Leel Electricals) is undergoing liquidation.

Himalayan Mineral Water contested, stating that individual banks lacked the right to demand repayment as credit facilities were extended under agreements with a consortium of twelve banks. Additionally, it opposed the bank's plea, citing that the bank's claim against Leel Electricals had already been admitted in the ongoing liquidation proceedings against Leel.

The NCLT dismissed these arguments, affirming a clear default by Himalayan Mineral Water.

"We are of the considered view that there exists financial debt that is payable and there is a default on the part of the respondent (Himalayan Mineral Water)," the NCLT held.

Consequently, the NCLT granted the bank's plea and commenced insolvency proceedings against Himalayan Mineral Water. Bhoopesh Gupta has been designated as the interim resolution professional.

The NCLT will convene on July 9 to address the matter further.