# In the matter of Adyama Rice Mill Private Limited C.P. (IB) No. 109-KB-2019

> NCLT judgment dated 2019-08-06. Citation: TCN-2019-NCLT-02080. United Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 6 Aug 2019
- **Citation:** TCN-2019-NCLT-02080
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/adyama-rice-mill-private-limited-cp-ib-no-109-kb-2019-3591579e

## Summary

### Background

United Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Adyama Rice Mill Private Limited for initiating the Corporate Insolvency Resolution Process (CIRP). The application was based on the Corporate Debtor's failure to repay credit facilities availed from the Financial Creditor. The Financial Creditor had enhanced the credit facilities over time, supported by sanction letters and executed documents. The Corporate Debtor defaulted on repayments, leading to the loan account being declared a Non-Performing Asset (NPA). The Financial Creditor issued a recall notice and initiated proceedings before the Debts Recovery Tribunal.

## Facts

United Bank of India (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Adyama Rice Mill Private Limited (Corporate Debtor) for initiating Corporate Insolvency Resolution Process (CIRP). The Financial Creditor had extended credit facilities to the Corporate Debtor, which were enhanced over time through sanction letters dated 31.05.2006, 23.10.2009, and 18.04.2011. The Corporate Debtor mortgaged property and executed banking documents in favor of the Financial Creditor. The Corporate Debtor confirmed the balance in the loan account on 31.12.2012. The Corporate Debtor defaulted in repayment, leading to the loan account being declared a Non-Performing Asset (NPA) on 31.08.2013. The Financial Creditor issued a

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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:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The court found that the Financial Creditor had produced sufficient evidence, including

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**Interpretation:** Section 7 of the IBC provides a mechanism for financial creditors to recover

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**Application:** The court applied the provisions of Section 7 of the IBC to the facts of the

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** United Bank of…
- **Respondents:** Adyama Rice Mill…

## Timeline

- **2006-05-31 — Sanction…**: Financial Creditor issued a Sanction Letter enhancing the existing limit of credit…
- **2009-10-23 — Sanction…**: Financial Creditor issued a Sanction Letter…

## 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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