# In the matter of Pondicherry Extraction Industries Pvt. Ltd. Vs. Bank of Baroda CA (AT) (Ins) No. 471 of 2020

> NCLAT judgment dated 2021-01-20. Citation: TCN-2021-NCLAT-00396. Pondicherry Extraction Industries Pvt. Ltd. filed an application under Section 10 of the…

- **Court:** NCLAT
- **Order date:** 20 Jan 2021
- **Citation:** TCN-2021-NCLAT-00396
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/pondicherry-extraction-industries-pvt-ltd-vs-bank-of-baroda-ca-00fbabb4

## Summary

### Background

Pondicherry Extraction Industries Pvt. Ltd. filed an application under Section 10 of the Insolvency & Bankruptcy Code, 2016, before the Adjudicating Authority (NCLT, Division Bench-I, Chennai) for initiating the corporate insolvency resolution process (CIRP). The application was rejected by the Adjudicating Authority due to discrepancies in the financial statements and the belief that the application was filed with an ulterior motive to defeat SARFAESI measures initiated by the financial creditor, Bank of Baroda. The Adjudicating Authority noted discrepancies in audited balance sheets and a depletion in the general reserve amount, which the Corporate Applicant could not explain. The Adjudicating Authority believed the application was surrounded by doubts and

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## Facts

Pondicherry Extraction Industries Pvt. Ltd. (the Corporate Applicant) filed an application under Section 10 of the Insolvency & Bankruptcy Code, 2016, to initiate the corporate insolvency resolution process. The Corporate Applicant is a guarantor for a loan taken by JR Foods Ltd. from Bank of Baroda (the Financial Creditor). JR Foods Ltd. defaulted on its repayment obligations, leading to its accounts being classified as NPA on 2019-03-30. The Financial Creditor issued a demand notice under Section 13(2) of the SARFAESI Act, 2002, to the borrower and the guarantor. The shareholders of the Corporate Applicant approved the initiation of CIRP in an Extraordinary General Meeting held on 2019-09-12. The Adjudicating Authority (NCLT, Chennai) rejected the application due

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## Issues and analysis

### Issue 1: Whether Rule 7 of Adjudicating Authority Rules empowers the Adjudicating Authority to examine the …

**Ratio:** The ratio is that Rule 7 of the Adjudicating Authority Rules provides the procedure for

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**Reasoning:** The court reasoned that the Adjudicating Authority exceeded its jurisdiction by analyzing

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**Interpretation:** The interpretation is that the Adjudicating Authority's power to examine

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**Application:** In this case, the Adjudicating Authority rejected the application based on

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## Parties

- **Judges:** Jarat Kuma…; Balvinder…
- **Respondents:** PONDICHERRY…; Bank of B…
- **Advocates:** AS Satish…; Gautam…; +1 more

## Timeline

- **2019-03-30 — Account Classi…**: Accounts of JR Foods Ltd. classified…
- **2019-09-12 — EGM Appr…**: Shareholders of the Corporate Applicant approved initiation of CIRP in an Extraordinary…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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