# In the matter of Ashapura Garments Limited CP (IB) No. 732-NCLT-AHM-2019

> NCLT judgment dated 2021-09-27. Citation: TCN-2021-NCLT-00981. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 27 Sept 2021
- **Citation:** TCN-2021-NCLT-00981
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ashapura-garments-limited-cp-ib-no-732-nclt-ahm-2019-122fc82c

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Canara Bank against Ashapura Garments Ltd, claiming a default of Rs. 236,57,49,170.13 as of 30.06.2019. The corporate debtor's account was classified as NPA on 18.02.2015. The financial creditor had sanctioned and renewed credit facilities to the corporate debtor between 12.08.2008 and 06.05.2014. The corporate debtor filed annual returns/balance sheets acknowledging the NPA status and an outstanding amount of Rs. 165,18,75,793/-. The corporate debtor made some part payments on 26.08.2015 and 20.04.2018.

## Facts

Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Ashapura Garments Ltd. The claimed default amount was Rs. 236,57,49,170.13 as of 30.06.2019. The account was classified as NPA on 18.02.2015. Credit facilities were sanctioned and renewed between 12.08.2008 and 06.05.2014. Ashapura Garments Ltd filed annual returns/balance sheets acknowledging the NPA status and an outstanding amount of Rs. 165,18,75,793/-. Part payments were made on 26.08.2015 and 20.04.2018. The corporate debtor raised objections, alleging inconsistent default dates in the financial creditor's affidavits. The financial creditor filed copy of annual returns/balance sheets for the period 1st April, 2017 to 31st March, 2018, wherein, it has been

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## Issues and analysis

### Issue 1: Whether the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 is …

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

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**Reasoning:** The Adjudicating Authority considered the submissions made by both sides and the material

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

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**Application:** The Adjudicating Authority found that the debt exceeded the threshold limit and

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Canara…
- **Respondents:** Ashapura Garments…

## Timeline

- **2015-02-18 — Account Classified as…**: The corporate debtor's account was…
- **2015-08-26 — Part Payment by…**: The corporate debtor made a part payment…

## 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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