# In the matter of Benaka Sponge Iron Private Limited

> NCLT judgment dated 2019-11-26. Citation: TCN-2019-NCLT-00433. The case involves an application (I.A.No.568 of 2019) seeking the dissolution of Benaka Sponge…

- **Court:** NCLT
- **Order date:** 26 Nov 2019
- **Citation:** TCN-2019-NCLT-00433
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/benaka-sponge-iron-private-limited-0791ed58

## Summary

### Background

The case involves an application (I.A.No.568 of 2019) seeking the dissolution of Benaka Sponge Iron Private Limited (Corporate Debtor) due to the absence of assets for liquidation. The Corporate Insolvency Resolution Process (CIRP) was initiated following a petition (C.P.(IB)No.166/BB/2018) filed by Agarwal Coal Corporation Private Limited (Operational Creditor) under Section 9 of the IBC, 2016, citing a default of Rs.1,87,95,291.51/-. The petition was admitted on 07.03.2019, and Ms. Manjula B.S was appointed as the Interim Resolution Professional (IRP). A public announcement was made on 13.03.2018, inviting claims against the Corporate Debtor. The company's financial difficulties included its loan account being classified as NPA by IDBI, cessation of production due to

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## Facts

Benaka Sponge Iron Private Limited (Corporate Debtor) faced Corporate Insolvency Resolution Process (CIRP) initiated by Agarwal Coal Corporation Private Limited (Operational Creditor) due to a default of Rs. 1,87,95,291.51. The petition was admitted on 07.03.2019. Ms. Manjula B.S was appointed as the Interim Resolution Professional (IRP). The company's financial difficulties included its loan account being classified as NPA by IDBI on 31.10.2014, cessation of production from 17.12.2015 due to unpaid electricity charges amounting to Rs. 19,62,486, and a reference to BIFR registered on 17.03.2016. The assets were sold under the SARFAESI Act by RBL on 03.09.2018, resulting in a nil liquidation value. The IRP reported that Rs. 44,432 was available in cash, and Rs.

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor, Benaka Sponge Iron Private Limited, should be dissolved due to the …

**Ratio:** The Adjudicating Authority has the power to dissolve a company under Rule 11 of NCLT

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**Reasoning:** The court reasoned that the Corporate Debtor had no assets to liquidate, and no

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**Interpretation:** This interpretation emphasizes the court's inherent power to dissolve a company

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**Application:** In this specific case, the court applied the ratio by dissolving Benaka Sponge

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Respondents:** Benaka Sponge…; Agarwal Coal…
- **Advocates:** S Viveka…

## Timeline

- **2018-03-13 — Public Annou…**: Public announcement was made inviting claims from the parties against the Corporate…
- **2019-03-07 — Admission of Petition…**: The Petition was admitted by the Adjudicating Authority initiating CIRP and appointing…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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