# In the matter of Agroha Paper Industries Private Limited vs. Bank of Maharashtra

> NCLAT judgment dated 2024-07-25. Citation: TCN-2024-NCLAT-00299. The appeal arises from an order dated 22.08.2023 passed by the Adjudicating Authority…

- **Court:** NCLAT
- **Order date:** 25 Jul 2024
- **Citation:** TCN-2024-NCLAT-00299
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/agroha-paper-industries-private-limited-vs-bank-of-maharashtra-20f310e9

## Summary

### Background

The appeal arises from an order dated 22.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Allahabad Bench, Prayagraj) in CP (IB) No. 72/ALD/2022, which dismissed the Section 10 application filed by Agroha Paper Industries Private Limited (Corporate Applicant) seeking to initiate Corporate Insolvency Resolution Proceedings (CIRP) against itself. The Corporate Debtor claimed fiscal distress and business losses due to the Covid pandemic as reasons for filing the Section 10 application. The Respondent Bank had declared the Corporate Applicant's account as NPA on 28.10.2018 and issued a demand notice on 11.01.2019 under Section 13(2) of the SARFAESI Act, 2002. The Corporate Debtor had sought additional loan facility, which was rejected. The

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## Facts

Agroha Paper Industries Private Limited (Corporate Debtor) took a loan facility from Bank of Maharashtra (Respondent Bank) and defaulted on repayments. The Respondent Bank declared the Corporate Debtor's account as NPA on 28.10.2018. The Respondent Bank issued a demand notice on 11.01.2019 under Section 13(2) of the SARFAESI Act, 2002. The Corporate Debtor requested additional loan facility, which was rejected. The Corporate Debtor filed a Section 10 application under the IBC on 04.08.2022, citing fiscal distress due to the Covid pandemic. The Respondent Bank initiated SARFAESI proceedings, took possession of the Corporate Debtor's mortgaged properties, and confirmed the sale to a successful bidder before the Section 10 application was filed. The Corporate Debtor also

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority committed any error in rejecting the Section 10 application …

**Ratio:** The Adjudicating Authority is justified in rejecting a Section 10 application if it finds

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**Reasoning:** The NCLAT found that the Corporate Debtor had defaulted on loan repayments, was declared

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**Interpretation:** Section 10 of the IBC allows a Corporate Debtor to initiate CIRP against

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**Application:** In this case, the NCLAT held that the Corporate Debtor's actions indicated a

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** M/s Agroha Paper…
- **Respondents:** Agroha Paper…; Bank of Maharashtr…

## Timeline

- **2018-10-28 — Account decla…**: Respondent Bank declared the Corporate…
- **2019-01-11 — Demand Notice…**: Respondent Bank issued a demand notice under…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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