# In the matter of Aeon Manufacturing Pvt. Ltd. CP(IB) No. 683-KB-2018

> NCLT judgment dated 2019-10-30. Citation: TCN-2019-NCLT-00776. The case involves an application filed by Bank of India, the Financial Creditor, against M/s.…

- **Court:** NCLT
- **Order date:** 30 Oct 2019
- **Citation:** TCN-2019-NCLT-00776
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/aeon-manufacturing-pvt-ltd-cpib-no-683-kb-2018-3a65865a

## Summary

### Background

The case involves an application filed by Bank of India, the Financial Creditor, against M/s. Aeon Manufacturing Pvt. Ltd., the Corporate Debtor, under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP). The Financial Creditor had sanctioned credit limits to the Corporate Debtor, which were duly disbursed. The Corporate Debtor defaulted on repayments, leading to the loan account being classified as NPA. Despite a demand notice, the Corporate Debtor failed to pay the outstanding amount. The Corporate Debtor had mortgaged its assets to the Financial Creditor.

## Facts

Bank of India, the Financial Creditor, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Aeon Manufacturing Pvt. Ltd., the Corporate Debtor. The Financial Creditor had sanctioned credit limits of Rs. 70 Crores to the Corporate Debtor on 2012-07-20, which were duly disbursed. The Corporate Debtor defaulted on 2016-03-31, and the loan account was classified as NPA on 2016-06-30. A demand notice was issued on 2018-02-08, but the Corporate Debtor failed to pay Rs. 74,28,51,444.72. The Corporate Debtor had mortgaged its assets to the Financial Creditor. The Corporate Debtor made an upfront payment of Rs. 50 Lakh on 2018-07-02, relating to an OTS proposal. The Corporate

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## Issues and analysis

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

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

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**Reasoning:** The Tribunal found that the Financial Creditor had provided sufficient evidence of the

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** The Tribunal applied Section 7 to the facts of the case, finding that the

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** Bank of…
- **Respondents:** M/s. Aeon…

## Timeline

- **2012-07-20 — Sanction of Credit…**: The Financial Creditor sanctioned credit limits…
- **2016-03-31 — Default by Corporate…**: The Corporate Debtor committed…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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