# In the matter of Ashoka Maltiyarn Mills Ltd. (IB)-400-(ND)-2017

> NCLT judgment dated 2017-11-15. Citation: TCN-2017-NCLT-00192. Union Bank of India filed a petition as a Financial Creditor under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 15 Nov 2017
- **Citation:** TCN-2017-NCLT-00192
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ashoka-maltiyarn-mills-ltd-ib-400-nd-2017-5d8c0ac8

## Summary

### Background

Union Bank of India filed a petition as a Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against Ashoka Maltiyarn Mills Ltd. due to its inability to pay its debt. The Corporate Debtor had availed various credit facilities and defaulted on repayments, leading to the account being declared a Non-Performing Asset on 2015-06-30. The Financial Creditor recalled all the limits and issued a notice under Section 13(2) of the SARFAESI Act. A recovery suit was also pending before DRT-1, Kolkata.

## Facts

Union Bank of India, a scheduled bank, filed a petition against Ashoka Maltiyarn Mills Ltd. under Section 7 of the Insolvency and Bankruptcy Code, 2016. Ashoka Maltiyarn Mills Ltd. had availed various credit facilities from Union Bank of India. As security for the loans, the Corporate Debtor executed various documents, including personal guarantees and deeds of hypothecation. The Corporate Debtor defaulted in making timely remittances, leading to the account being declared a Non-Performing Asset on 2015-06-30. Union Bank of India issued a notice under Section 13(2) of the SARFAESI Act and filed a recovery suit before DRT-1, Kolkata. The total outstanding liability as of 2017-08-31 was Rs. 25,93,84,046.73. The Corporate Debtor acknowledged the debt through balance

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor is in default of liquidating its debt as per the Insolvency and …

**Ratio:** Section 3(12) of the IBC defines default as non-payment of debt when it has become due

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**Reasoning:** The court noted that the Corporate Debtor had failed to adhere to the terms and

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**Interpretation:** The court interpreted Section 3(12) of the IBC to mean that if a debt is due

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**Application:** The court applied the definition of default to the facts of the case, noting

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## Parties

- **Judges:** Ina Mal…; S. K. MOH…
- **Appellants:** Union Bank of…
- **Respondents:** Ashoka Maltiyarn…

## Timeline

- **2015-06-30 — Account Decla…**: The account of Ashoka Maltiyarn Mills Ltd.…
- **2017-08-31 — Outstanding L…**: The total outstanding liability of Ashoka…

## 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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