# In the matter of Shri Raju Chappakal Pappu & Ors. Vs. Shri Arunava Sikdar & Anr. Company Appeal (AT) (Insolvency) No. 681 of 2019

> NCLAT judgment dated 2022-03-07. Citation: TCN-2022-NCLAT-00598. The appeal was filed by the suspended directors of Dugal Projects Development Company Private…

- **Court:** NCLAT
- **Order date:** 7 Mar 2022
- **Citation:** TCN-2022-NCLAT-00598
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/shri-raju-chappakal-pappu-ors-vs-shri-arunava-sikdar-anr-company-appeal-0e570d7e

## Summary

### Background

The appeal was filed by the suspended directors of Dugal Projects Development Company Private Limited against the order of the National Company Law Tribunal (NCLT), Mumbai Bench, which admitted an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by Alchemist Assets Reconstruction Company Private Limited (AARC), the Respondent No. 2, against the Corporate Debtor. The NCLT admitted CP 2527(IB)/MB/2018 against the Corporate Debtor but dismissed CP(IB) No. 2528/MB/2018 against the Principal Borrower, Sima Hotels and Reports Ltd. The Financial Creditor had filed two Section 7 applications on 10th July 2018, one against the Principal Borrower and one against the Corporate Debtor. The Corporate Debtor had provided a corporate guarantee for the

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## Facts

In 1986, Sima Hotels and Reports Ltd. (Principal Borrower) obtained financial assistance from IFCI/IDBI/ICICI to establish a five-star hotel in Goa on land owned by Dugal Projects Development Company Private Limited (Corporate Debtor). A loan agreement was executed on 04.11.1987, requiring the Principal Borrower to procure a corporate guarantee from the Corporate Debtor. The Corporate Debtor executed a deed of personal guarantee on 06.11.1987. The Principal Borrower defaulted on repayment, leading IFCI to cancel the undisbursed loan on 13.03.1989 and recall the outstanding amount on 29.11.1989. IFCI invoked the guarantee on 05.01.1990, demanding Rs. 5,43,94,687/-. A joint civil suit was filed in 1991 and transferred to Debt Recovery Tribunal (DRT), Mumbai, renumbered

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** The settled law is that an application under Section 7 of the IBC is governed by Article

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**Reasoning:** The NCLAT reasoned that the Adjudicating Authority erred in not considering the objection

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**Interpretation:** The interpretation of the Limitation Act in the context of IBC proceedings is

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**Application:** In this case, the NCLAT found that the default occurred in 1989, and the

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…
- **Appellants:** Raju Chappakal…
- **Respondents:** Dugal Projects…; ArunavaS…

## Timeline

- **1986-01-01 — Financial Assistance…**: Sima Hotels and Reports Ltd. obtained…
- **1987-11-04 — Loan Agreement…**: Loan Agreement executed…

## 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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