# In the matter of Vijay Jain & Ors. vs. Laxmi Foils Pvt. Ltd.

> NCLAT judgment dated 2024-01-03. Citation: TCN-2024-NCLAT-00711. The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, by the…

- **Court:** NCLAT
- **Order date:** 3 Jan 2024
- **Citation:** TCN-2024-NCLAT-00711
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/vijay-jain-ors-vs-laxmi-foils-pvt-ltd-b748af9b

## Summary

### Background

The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, by the Appellants against an order dated 05.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench, Court-II) in CP (IB) No.742(ND)/2022. The Adjudicating Authority had dismissed the Section 7 application filed by Vijay Jain and others seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Laxmi Foils Private Limited, the Respondent. The Appellants, who had extended loans to the Corporate Debtor, claimed default in repayment. The Appellants and the Corporate Debtor had entered into a Memorandum of Understanding (MoU) and a Share-Purchase Agreement (SPA). The Appellants contended that the Corporate Debtor failed to repay the

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## Facts

Vijay Jain and others (Appellants) filed an appeal against the order of the Adjudicating Authority (NCLT, New Delhi), which dismissed their Section 7 application to initiate CIRP against Laxmi Foils Private Limited (Respondent/Corporate Debtor). The Appellants had extended loans to the Corporate Debtor for business purposes. A Memorandum of Understanding (MoU) was entered into between the Corporate Debtor, a company named OFB, and the Appellants (Promoter Group), where OFB was to purchase the shareholding of the Corporate Debtor for Rs.51 crore. Subsequently, a Share-Purchase Agreement (SPA) was entered into on 03.02.2022. The Appellants claimed that the Corporate Debtor defaulted on 04.03.2022, as cheques issued for Rs.1.66 crore were not counter-signed by the

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority erred in dismissing the Section 7 application filed by the …

**Ratio:** The Adjudicating Authority can only admit a Corporate Debtor into CIRP if satisfied that

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**Reasoning:** The Adjudicating Authority was not satisfied with the evidence produced by the financial

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**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to be satisfied that a

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**Application:** The Appellants failed to provide sufficient evidence to prove the existence of

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** Vijay…
- **Respondents:** Laxmi Foils…; Laxmi Foils Pvt.…
- **Advocates:** Krishnendu…; Ashish…; +2 more

## Timeline

- **2021-11-25 — MoU Date…**: Memorandum of Understanding (MoU) was entered into between the Corporate Debtor, OFB, and…
- **2022-02-03 — SPA Exec…**: Share-Purchase Agreement (SPA) was entered…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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