NCLT Admits Insolvency Petition Against Mumbai Company Over ₹1,376 Crore Default

Mumbai, October 30, 2026: The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted an insolvency petition filed by Sevantilal Fakirchand and Company Pvt Ltd, initiating the Corporate Insolvency Resolution Process (CIRP) against the company over a total default of ₹1,376 crore.

In its October 27 order, the NCLT held that the company’s application under Section 10 of the Insolvency and Bankruptcy Code (IBC) was complete and that the default exceeded the prescribed threshold.

The company’s principal financial liability arose from corporate guarantees furnished for credit facilities availed by Antrix Diamond Exports Pvt Ltd, which subsequently went into liquidation.

Default Arises From Corporate Guarantees

The tribunal noted that the outstanding liability primarily arose from guarantees given to a consortium of lenders led by Bank of India. After the principal borrower defaulted on its loans, the lenders initiated recovery proceedings under the SARFAESI Act.

Bank of India issued a fresh demand notice on July 30, 2026, recording outstanding dues of ₹1,373.42 crore against the guarantors and mortgagors, including Sevantilal Fakirchand and Company.

“The Corporate Applicant has placed on record the Board Resolution passed at the meeting of the Board of Directors held on 01.08.2026 and the Special Resolution passed on 27.08.2026, whereby approval was accorded for the initiation of the Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016. By the said resolutions, Mr. Jaswantsinh Pratapsingh Sisodiya, Additional Director of the Corporate Applicant, was duly authorised to institute the present application and to undertake all necessary acts, deeds, filings, and compliances in connection therewith under the provisions of the Insolvency and Bankruptcy Code, 2016.”

According to the petition, the company’s total default stood at ₹1,376 crore. This included ₹1,373.42 crore arising from corporate guarantees, ₹95.55 lakh owed to operational creditors and ₹1.62 crore payable to an unsecured financial creditor, a related party.

Tribunal Examines Guarantor's Liability

The tribunal observed that a guarantor’s liability is co-extensive with that of the principal borrower under Section 128 of the Indian Contract Act, unless otherwise provided by the contract. It held that the company’s liability under the guarantees had become enforceable following the principal borrower’s default and invocation of the guarantees.

“Upon the Principal Borrower committing default and the creditor invoking the Corporate Guarantee(s), the liability of the Corporate Applicant as guarantor becomes enforceable in accordance with the terms of the guarantee. Where the Corporate Applicant is itself unable to discharge its enforceable financial obligations arising therefrom, it may seek initiation of the Corporate Insolvency Resolution Process against itself under Section 10 of the Insolvency and Bankruptcy Code, 2016, subject to fulfilment of the statutory requirements prescribed thereunder,” the order reads.

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Management To Vest In Insolvency Professional

During the insolvency process, the company’s management will vest in the IRP or the resolution professional. The tribunal directed the company’s officers and managers to provide the required records and information to the IRP within a week of receiving the order.

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