# In the matter of Pawan Rajgaria vs. Canara Bank & Ors.

> NCLAT judgment dated 2024-05-07. Citation: TCN-2024-NCLAT-00453. This appeal was filed by the Suspended Director of the Corporate Debtor challenging the order…

- **Court:** NCLAT
- **Order date:** 7 May 2024
- **Citation:** TCN-2024-NCLAT-00453
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/pawan-rajgaria-vs-canara-bank-ors-009b1a7e

## Summary

### Background

This appeal was filed by the Suspended Director of the Corporate Debtor challenging the order dated 02.02.2024 passed by the National Company Law Tribunal (NCLT), Division (Special) Bench, Court No.II, Kolkata, which admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by Canara Bank, the Financial Creditor. The appellant contended that the Section 7 application was barred by Section 10A of the IBC.

## Facts

Canara Bank sanctioned a Cash Credit Limit of Rs.6 crores and FLC of Rs.4 crores, totaling Rs.10 crores, to Ananya Wood Private Limited (Corporate Debtor) on 28.08.2016. A Working Capital Consortium was executed on 23.12.2016 for Rs.42.30 crores, with Canara Bank sanctioning Rs.7 crores and State Bank of India Rs.35.30 crores. The Financial Creditor last renewed the Sanctioned Facilities on 26.07.2019 for one year. The Corporate Debtor's account was declared NPA on 14.02.2020. A notice under Section 13(2) of the SARFAESI Act, 2002, was issued on 18.02.2020. M/s Rajgaria Timber Private Limited filed a Writ Petition Appeal (APO No.111 of 2020) questioning the SARFAESI Act steps, which was disposed of directing SBI to decide on the 270 days credit issue. On 15.02.2022,

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## Issues and analysis

### Issue 1: Whether the Section 7 Application filed by Canara Bank was barred by Section 10A of the Insolvency …

**Ratio:** Section 10A of the IBC provides a bar on initiating corporate insolvency resolution

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**Reasoning:** The NCLAT reasoned that the date of default was clearly mentioned as 14.02.2020 in the

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**Interpretation:** The court interpreted Section 10A in light of the facts presented, emphasizing

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**Application:** The NCLAT applied the ratio of Laxmi Pat Surana to the facts, noting that the

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## Parties

- **Judges:** Ashok Bh…; Barun M…; +1 more
- **Appellants:** Pawan Raj…
- **Respondents:** Ananya Wood…; Canara…
- **Advocates:** Abhijeet…; Pallavi P…; +9 more

## Timeline

- **2016-08-28 — Sanction of Credit…**: Canara Bank sanctioned Cash Credit Limit of Rs.6 crores and FLC of Rs.4 crores to the…
- **2016-12-23 — Working Capital…**: Working Capital Consortium…

## 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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