# In the matter of Sandip Narendrakumar Patel vs. Svakarma Finance Pvt. Ltd. & Anr.

> NCLAT judgment dated 2024-11-05. Citation: TCN-2024-NCLAT-00123. The case involves an appeal against the order passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 5 Nov 2024
- **Citation:** TCN-2024-NCLAT-00123
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/sandip-narendrakumar-patel-vs-svakarma-finance-pvt-ltd-anr-1d2c7d5a

## Summary

### Background

The case involves an appeal against the order passed by the National Company Law Tribunal (NCLT), Ahmedabad, which admitted a Corporate Insolvency Resolution Process (CIRP) application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The appellant, who is the Promotor/Director of Yours Ethnic Foods Pvt. Ltd. (Corporate Debtor), challenged the validity of the NCLT order. The financial creditor, Svakarma Finance Pvt. Ltd., had sanctioned a working capital term loan to the Corporate Debtor, and a loan agreement was executed. The loan was to be repaid in installments, but defaults occurred. The financial creditor filed an application under Section 7 of the Code, alleging default. The NCLT admitted the petition, leading to this appeal.

## Facts

Svakarma Finance Pvt. Ltd. (Financial Creditor) sanctioned a working capital term loan to Yours Ethnic Foods Pvt. Ltd. (Corporate Debtor). A loan agreement was executed on 25.07.2019. The loan was granted for three years, from 20.08.2019 to 20.07.2022, with a 14% p.a. interest rate. The Financial Creditor disbursed the loan in two installments: Rs. 83,70,200 to the Corporate Debtor and Rs. 25,00,000 to a supplier of the Corporate Debtor. The repayment was to be made as per clause 5 of the agreement, with monthly installments due on the 20th of each month. The Corporate Debtor failed to pay the January 2020 installment on time and paid it in February 2020 without penal interest. The February 2020 installment was not paid at all. The Financial Creditor issued a loan

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## Issues and analysis

### Issue 1: Whether the recall notice dated 06.11.2020 should be considered the date of default as 21.11.2020, …

**Ratio:** The date of default is determined by the actual failure to pay the debt when due, not by

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**Reasoning:** The court reasoned that the default occurred when the Corporate Debtor failed to pay the

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**Interpretation:** Section 10A of the Insolvency and Bankruptcy Code provides a moratorium on the

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**Application:** In this case, the Corporate Debtor defaulted on the loan repayments in January

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…; +1 more
- **Appellants:** Sandip Narendrakum…
- **Respondents:** Yours Ethnic…; Svakarma Finance…
- **Advocates:** Atul Sh…; Kuld…; +6 more

## Timeline

- **2019-07-25 — Loan Agreement…**: Loan agreement executed between Svakarma Finance Pvt. Ltd. and Yours Ethnic Foods Pvt.…
- **2019-08-20 — Loan Period…**: Loan period started,…

## 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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