# In the matter of Alba Industries Limited IBA-43-2020

> NCLT judgment dated 2021-04-27. Citation: TCN-2021-NCLT-02271. The Federal Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 27 Apr 2021
- **Citation:** TCN-2021-NCLT-02271
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/alba-industries-limited-iba-43-2020-db9f76a2

## Summary

### Background

The Federal Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Alba Industries Limited, the Corporate Debtor, due to a default of Rs.18,03,08,877.60 as of 07.11.2019. The Corporate Debtor had approached the Financial Creditor for credit facilities, which were sanctioned on 26.08.2015. The Corporate Debtor executed promissory notes and a security delivery letter. The Corporate Debtor defaulted on repayment, leading to the account being classified as a Non-Performing Asset (NPA) on 27.08.2018. The Financial Creditor issued a demand notice under Section 13(2) of the SARFAESI Act on 12.11.2018. The Corporate Debtor made some payments, but a total

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## Facts

The Federal Bank Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Alba Industries Limited (Corporate Debtor). The basis for the application was a default in repayment of Rs.18,03,08,877.60 as of 07.11.2019. The Corporate Debtor had availed credit facilities from the Financial Creditor, sanctioned on 26.08.2015, including Packing Credit, FD/UBP, and a Term Loan. The Corporate Debtor executed promissory notes and a security delivery letter. The account was classified as a Non-Performing Asset (NPA) on 27.08.2018, following the default. A demand notice under Section 13(2) of the SARFAESI Act was issued on 12.11.2018. The Corporate Debtor

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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 Adjudicating Authority found that the Financial Creditor had proven the existence of

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

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**Application:** The Financial Creditor demonstrated that the Corporate Debtor had defaulted on

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## Parties

- **Judges:** R. Sucha…; B. ANIL…
- **Respondents:** Alba Industries…; The Federal Bank…

## Timeline

- **2015-08-26 — Credit Facilities…**: The Financial Creditor sanctioned Packing Credit, FD/UBP, and a Term Loan to the…
- **2018-08-27 — Account Classified as…**: The Corporate Debtor's account was classified as a Non-Performing Asset (NPA) due to…

## 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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