# In the matter of Sushil Kumar Singh vs. Shalini Chaudhary & Ors. Company Appeal (AT) (Insolvency) No. 135 of 2020

> NCLAT judgment dated 2022-08-05. Citation: TCN-2022-NCLAT-00302. This appeal challenges an order dated 2019-11-13, which allowed an application under Section…

- **Court:** NCLAT
- **Order date:** 5 Aug 2022
- **Citation:** TCN-2022-NCLAT-00302
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/sushil-kumar-singh-vs-shalini-chaudhary-ors-company-appeal-13dbd3f7

## Summary

### Background

This appeal challenges an order dated 2019-11-13, which allowed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against 'Mothers' Pride Dairy India Pvt. Ltd.' Respondent No. 1, a Promoter Director and Shareholder, claimed to have infused Rs. 19,17,48,515 into the company and was issued 1,29,42,999 equity shares. Respondent No. 1 ceased to be a director on 2017-04-01 and transferred their shareholding to Respondent No. 3. It was alleged that Respondent No. 1 agreed to advance a loan of Rs. 2 Crores to the Corporate Debtor, formalized in an agreement dated 2017-07-10, to be repaid

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## Facts

Respondent No. 1, Sushil Kumar Singh, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against 'Mothers' Pride Dairy India Pvt. Ltd.' (Corporate Debtor), seeking to initiate CIRP. Respondent No. 1 claimed to have infused Rs. 19,17,48,515 into the company and was issued 1,29,42,999 equity shares. Respondent No. 1 ceased to be a director of the Corporate Debtor on 2017-04-01 and transferred their shareholding to Respondent No. 3. Respondent No. 1 allegedly agreed to advance a loan of Rs. 2 Crores to the Corporate Debtor, formalized in an agreement dated 2017-07-10, to be repaid in four equal installments without interest. The Section 7 application was filed alleging Respondent No. 2 failed to pay installments due on 2019-01-10 and

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## Issues and analysis

### Issue 1: Whether the loan agreement dated 2017-07-10 could have been validly executed at the instance of the …

**Ratio:** Once CIRP proceedings are initiated and an Interim Resolution Professional (IRP) has been

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**Reasoning:** The court reasoned that the crucial factor is the date on which the CIRP was initiated.

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**Interpretation:** This interpretation clarifies that the initiation of CIRP effectively suspends

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**Application:** Since the CIRP was initiated before the loan agreement was executed, the loan

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## Parties

- **Judges:** Rakesh Kuma…; Kanthi Na…; +2 more
- **Appellants:** Sushil Kuma…
- **Respondents:** Mothers Pride…; Mothers' Pride…; +1 more

## Timeline

- **2017-04-01 — Director Ceas…**: Respondent No. 1 ceased to be a director of the Corporate Debtor and transferred…
- **2017-06-27 — CIRP Init…**: CIRP proceedings were initiated against the…

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