# In the matter of Bansal Refineries Private Limited C.P. (IB) No. 11-KB-2019

> NCLT judgment dated 2019-07-09. Citation: TCN-2019-NCLT-02615. Corporation Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 9 Jul 2019
- **Citation:** TCN-2019-NCLT-02615
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/bansal-refineries-private-limited-cp-ib-no-11-kb-2019-09252233

## Summary

### Background

Corporation Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Bansal Refineries Private Limited, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was filed due to the corporate debtor's failure to repay credit facilities sanctioned by the bank, which had been enhanced over time. The bank claimed a default of Rs. 11,51,88,197.78, inclusive of interest, as of 30.11.2015. The corporate debtor had acknowledged the debt and created security interests in favor of the bank. The corporate debtor failed to maintain the accounts in a regular manner, leading to the account being classified as NPA. The financial creditor had also filed an application under section 19 of Recovery of Debts Due to

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## Facts

Corporation Bank sanctioned credit facilities to Bansal Refineries Private Limited, which were enhanced over time. The facilities were secured by equitable mortgage of immovable property and hypothecation of movable assets. The Corporate Debtor executed a continuity letter and deposited title deeds with the Financial Creditor. The Corporate Debtor failed to maintain accounts properly, leading to the account being classified as NPA. The Financial Creditor served a demand notice and filed an application under the RDDBFI Act. The Corporate Debtor acknowledged the borrowing and created security interests. The total amount due, including interest, was Rs. 18,69,62,595.78 as of 30th November, 2018. The Corporate Debtor defaulted on payments, leading the Financial Creditor to

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## Issues and analysis

### Issue 1: Whether the Financial Creditor's application under Section 7 of the Insolvency and Bankruptcy Code, …

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

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**Reasoning:** The Tribunal was satisfied that the Financial Creditor had made out its case for

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

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**Application:** The Tribunal applied Section 7 to the facts of the case, noting that the

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** Corporatio…
- **Respondents:** Bansal Refineries…

## Timeline

- **2010-01-01 — Credit Facilities…**: Financial Creditor Bank sanctioned various…
- **2012-06-20 — Renewal of Credit…**: Corporate Debtor approached for renewal of existing credit facilities, which was…

## 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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