# In the matter of Artedz Fabs Limited C.P. (IB) - 1098-MB-2020

> NCLT judgment dated 2021-02-18. Citation: TCN-2021-NCLT-03010. Kanoria Chembond Private Limited (Petitioner) sought the Corporate Insolvency Resolution…

- **Court:** NCLT
- **Order date:** 18 Feb 2021
- **Citation:** TCN-2021-NCLT-03010
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/artedz-fabs-limited-cp-ib-1098-mb-2020-952d95e9

## Summary

### Background

Kanoria Chembond Private Limited (Petitioner) sought the Corporate Insolvency Resolution Process (CIRP) of Artedz Fabs Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The basis for the application was the Corporate Debtor's default of Rs. 56,07,945/- plus interest, stemming from an Inter Corporate Deposit (ICD) Agreement. The Petitioner had granted a loan to the Corporate Debtor to meet working capital needs, with the ICD Agreement outlining the terms of the deposit, including an 18-month tenure and a 12% per annum interest rate. The Corporate Debtor made partial repayments but failed to fully repay the outstanding amount upon the expiry of the extended tenure.

## Facts

Kanoria Chembond Private Limited (Kanoria) and Artedz Fabs Limited (Artedz) entered into an Inter Corporate Deposit (ICD) agreement on 2016-07-18, where Kanoria extended a debt of Rs. 70 lakhs to Artedz. The amount was disbursed in installments between 2016-07-22 and 2016-08-31, with an interest rate of 12% per annum, calculated quarterly on the reducing balance. Artedz repaid Rs. 20 lakhs on 2017-04-17, leaving a balance of Rs. 50 lakhs. The ICD tenure expired on 2018-03-31. Kanoria demanded the refund of the balance amount with interest on 2018-05-15. The tenure was extended until 2019-03-31. Artedz paid interest on 2018-06-08, 2018-06-12, and 2018-06-15 but failed to pay the balance amount along with interest by 2019-03-31. Kanoria issued another demand letter on

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted on its …

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

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**Reasoning:** The court noted that the Corporate Debtor admitted its dues to the Petitioner in its

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**Interpretation:** The interpretation of Section 7 involves determining whether a debt exists and

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**Application:** The court applied the ratio to the facts by noting the Corporate Debtor's

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## Parties

- **Judges:** SUCHITRAKAN…; Chandra Bha…
- **Appellants:** Kanoria Chembond…
- **Respondents:** Artedz Fabs…

## Timeline

- **2016-07-18 — ICD Agre…**: Kanoria Chembond Private Limited and Artedz Fabs Limited executed an Inter Corporate…
- **2016-07-22 — First Disbu…**: First disbursement of Rs.…

## 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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