# In the matter of Deepakk Kumar Vs. Phoenix ARC Pvt. Ltd. and Anr.

> NCLAT judgment dated 2020-03-05. Citation: TCN-2020-NCLAT-00339. The case involves an appeal against the order dated 16th July, 2019, passed by the…

- **Court:** NCLAT
- **Order date:** 5 Mar 2020
- **Citation:** TCN-2020-NCLAT-00339
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/deepakk-kumar-vs-phoenix-arc-pvt-ltd-and-anr-9ade8ceb

## Summary

### Background

The case involves an appeal against the order dated 16th July, 2019, passed by the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench, which admitted a Section 7 application filed by the 1st Respondent/Applicant/Financial Creditor against the Corporate Debtor, Sovereign Developers and Infrastructure Ltd. The appellant, Deepakk Kumar, Director of the Corporate Debtor, challenged the validity, correctness, and legality of the impugned order, arguing that the Adjudicating Authority overlooked the hardships faced by the Appellant and that the application was barred by limitation. The Karnataka Bank Ltd., the original lender, had granted a loan to the Corporate Debtor, which later became a Non-Performing Asset (NPA). The bank assigned the debt to

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## Facts

Sovereign Developers and Infrastructure Ltd. (SDIL), the Corporate Debtor, commenced construction of the 'Sovereign Unnathi' project in May 2010. Karnataka Bank granted SDIL a term loan of Rs. 25 crores, to be repaid in installments from November 2012 to May 2014. SDIL defaulted, and its account was classified as a Non-Performing Asset (NPA) on 16.08.2013. Karnataka Bank issued a demand notice on 17.02.2014, seeking repayment of Rs. 19,32,25,988.22. On 29.03.2016, Karnataka Bank assigned the debt to Phoenix ARC Private Limited. SDIL obtained an additional Rs. 5 crores from Phoenix ARC on 09.06.2016, with personal guarantees provided. SDIL failed to repay the outstanding sum of Rs. 35,33,34,286, leading Phoenix ARC to issue a recall notice on 24.08.2017. As of

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## Issues and analysis

### Issue 1: Whether the application under Section 7 …

**Ratio:** Section 18 of the Limitation Act, 1963 states that an acknowledgement of debt can extend

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**Reasoning:** The Tribunal considered the Appellant's argument that the application was filed beyond

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The Tribunal found that the Corporate Debtor had made part payments and

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## Parties

- **Judges:** Venugop…; V. P. S…; +1 more
- **Appellants:** Deepakk…
- **Respondents:** Sovereign…; M/s Phoenix ARC…

## Timeline

- **2010-05-01 — Project Comme…**: Sovereign Developers and Infrastructure Ltd. commenced construction of the 'Sovereign…
- **N/A — Loan Gra…**: Karnataka Bank granted SDIL a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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