# In the matter of Shabad Khan Vs. M/s. Nisus Finance and Investment Manager & Ors. CA(AT)(Ins)No. 82 of 2020

> NCLAT judgment dated 2020-05-29. Citation: TCN-2020-NCLAT-00250. This case involves an appeal against an order by the Adjudicating Authority (National Company…

- **Court:** NCLAT
- **Order date:** 29 May 2020
- **Citation:** TCN-2020-NCLAT-00250
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/shabad-khan-vs-ms-nisus-finance-and-investment-manager-ors-ca-700de59f

## Summary

### Background

This case involves an appeal against an order by the Adjudicating Authority (National Company Law Tribunal) that admitted a Corporate Insolvency Resolution Process (CIRP) application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Earthcon Universal Infratech Pvt. Ltd. (Corporate Debtor). The application was filed by Nisus Finance and Investment Manager & Ors. (Financial Creditors). The appellant, a shareholder of the Corporate Debtor, challenged the admission order. The genesis of the dispute lies in a Debenture Trust Deed (DTD) executed in 2017, where the Corporate Debtor acted as an obligor. The Financial Creditors disbursed a tranche of payment, but the issuer company defaulted, leading to the CIRP application. The Corporate Debtor raised

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## Facts

The case involves a Company Appeal against the admission of a Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Earthcon Universal Infratech Pvt. Ltd. (Corporate Debtor). The appellant is a shareholder of the Corporate Debtor. The Financial Creditors, Nisus Finance and Investment Manager & Ors., initiated the CIRP based on a default under a Debenture Trust Deed (DTD) dated June 13, 2017. The DTD involved Earthcon Infracon Pvt. Ltd. (EIPL) as the issuer/mortgager, Beacon Trusteeship Limited as the trustee, and several obligors, including the Corporate Debtor. The Financial Creditors disbursed Rs.13.15 Crores between June and September 2017. The issuer company defaulted on repayment by March 31, 2019.

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was justified in admitting the application under Section 7 of …

**Ratio:** The ratio from Dr. Vishnu Kumar Agarwal's case states that simultaneous CIRP proceedings

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**Reasoning:** The court reasoned that allowing simultaneous proceedings would lead to conflicting

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**Interpretation:** The interpretation of Dr. Vishnu Kumar Agarwal's case is that it restricts the

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**Application:** In this case, the appellant argued that the Corporate Debtor is a guarantor,

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## Parties

- **Judges:** Bansi Lal…; Venugop…; +1 more
- **Appellants:** Shabad…
- **Respondents:** Earthcon Universal…; M/s. Nisus…

## Timeline

- **2017-06-13 — Debenture Trust Deed…**: DTD executed among Earthcon Infracon Pvt. Ltd., Beacon Trusteeship Limited, Earthcon…
- **2017-12-20 — DTD Amen…**: DTD amen…

## 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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