NCLT Mumbai Holds Clubbing of Group Entity Dues Impermissible for Meeting IBC Threshold Under Section 4

Overview of the Case

The National Company Law Tribunal, Mumbai Bench, delivered a significant ruling in R. Srikant Ayyer Vs Neogreen Agriculture LLP while adjudicating C.P.(IB)/654/MB/2026, a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Tribunal examined a critical and frequently arising question in insolvency proceedings — whether dues owed by two separate corporate entities belonging to the same business group can be aggregated to cross the minimum default threshold prescribed under Section 4 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP).

The Tribunal's answer was an unambiguous no. The application was rejected at the threshold stage itself, without delving into the merits of the underlying debt claims.

Background: How the Petition Came to Be Filed

Mr. R. Srikant Ayyer, the financial creditor, had been associated with M/s. Neogreen Agriculture LLP (the corporate debtor) since November 2016 in the capacity of a Consultant/Marine Engineer. Over time, he made financial commitments to both the corporate debtor and its group entity, Neogreen Ventures Limited (formerly Neogreen Ventures Private Limited), based on representations made by directors and personnel of the group.

The financial creditor's investments were routed through two distinct channels:

Investment with Neogreen Agriculture LLP

An Investment Agreement dated 05.12.2022 was executed between Mr. Ayyer and Neogreen Agriculture LLP. Under this agreement, a sum of Rs. 20,00,000/- was transferred via NEFT No. KARBR52022120100551604 dated 01.12.2022, for a tenure of five years under a scheme promising 25% yearly return along with principal repayment. The agreement stipulated:

• A monthly payout of Rs. 41,667/- from 01.12.2022 to 01.12.2027
• Return of principal amount of Rs. 20,00,000/- at the end of the five-year period
• Provision of a land guarantee (agricultural land in Village Duberer, Tal. Sinner, Nashik, admeasuring 20 guntha) within three months of the agreement's execution

The corporate debtor paid interest amounts of Rs. 37,500/- (minus TDS) from December 2022 through June 2023. Following June 2023, regular monthly payouts ceased. Only two sporadic payments — Rs. 69,500/- on 31st December 2025 and Rs. 41,700/- on 04th March 2026 — were subsequently received by the financial creditor. Additionally, the land guarantee was never furnished despite the contractual obligation.

Investment with Neogreen Ventures Limited

Separately, Neogreen Ventures Limited approached Mr. Ayyer for an investment under an alleged Compulsorily Convertible Preference Share (CCPS) scheme. The financial creditor was led to believe that CCPS certificates would be issued upon completion of formalities with the Registrar of Companies. Acting on these representations, he transferred the following amounts:

Neogreen Ventures Limited, through a letter dated 26.01.2023, acknowledged receipt of Rs. 30,00,000/- for the CCPS investment. An email dated 08th February 2023 from the corporate debtor group also acknowledged receipt of the financial creditor's disbursements.

The Financial Creditor's Core Argument: Single Economic Entity Theory

The financial creditor sought to project Neogreen Agriculture LLP and Neogreen Ventures Limited as a single economic entity on the following grounds: