# In the matter of Affinity Beauty Salon Pvt. Ltd. Company Petiiton No. (IB)-786 (PB)-2018

> NCLT judgment dated 2018-12-14. Citation: TCN-2018-NCLT-00071. The case involves an application filed by Anurag Chandra, the financial creditor, under Section…

- **Court:** NCLT
- **Order date:** 14 Dec 2018
- **Citation:** TCN-2018-NCLT-00071
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/affinity-beauty-salon-pvt-ltd-company-petiiton-no-ib-786-pb-2018-2dc467e5

## Summary

### Background

The case involves an application filed by Anurag Chandra, the financial creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Affinity Beauty Salon Pvt. Ltd., the corporate debtor. The applicant, on behalf of two partnership firms, had advanced funds to the corporate debtor for issuance of cumulative convertible redeemable preference shares. However, the corporate debtor failed to register these shares with the Registrar of Companies. Subsequently, a loan agreement was entered into between the applicant and the corporate debtor, but the corporate debtor defaulted on the repayment terms.

## Facts

Anurag Chandra, acting as a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Affinity Beauty Salon Pvt. Ltd., the corporate debtor. Initially, the applicant, representing two partnership firms (ACPC Enterprises and ACDC Enterprises), advanced Rs. 2,50,00,000 and Rs. 5,00,00,000 respectively to the corporate debtor for cumulative convertible redeemable preference shares. These shares were never registered by the corporate debtor with the Registrar of Companies (ROC). Subsequently, a Loan Agreement was executed on 2018-03-30, where the corporate debtor owed Rs. 10,46,00,000 to the applicant as of 2018-03-31. The loan was to be repaid within 4 years with

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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 reasoned that the applicant had filed the application under Section 7, claiming

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The court applied this principle by examining the facts to determine if the

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## Parties

- **Judges:** M. M. K…; S. K. MOH…
- **Appellants:** Anurag Ch…
- **Respondents:** Affinity Beauty…

## Timeline

- **2016-01-01 — Insolvency and…**: The Insolvency and…
- **2016-05-30 — Share Subscription…**: Share Subscription Agreements dated 2016-05-30 and 2016-06-04 were executed between the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60 — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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