# In the matter of Benaka Sponge Iron Private limited I.A. No. 568-2019 in C.P. (IB)No. 166-BB-2018

> NCLT judgment dated 2019-11-26. Citation: TCN-2019-NCLT-00451. The case involves an application to consider and approve the dissolution of Benaka Sponge Iron…

- **Court:** NCLT
- **Order date:** 26 Nov 2019
- **Citation:** TCN-2019-NCLT-00451
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/benaka-sponge-iron-private-limited-ia-no-568-2019-in-cp-ibno-166-bb-2018-099bff1b

## Summary

### Background

The case involves an application to consider and approve the dissolution of Benaka Sponge Iron Private Limited (Corporate Debtor) due to the absence of assets for liquidation and a zero liquidation value. The Corporate Insolvency Resolution Process (CIRP) was initiated following a petition by Agrawal Coal Corporation Private Limited, an operational creditor, due to 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).

## Facts

Agrawal Coal Corporation Private Limited filed C.P.(IB)No.166/BB/2018 under Section 9 of the IBC, 2016, seeking to initiate Corporate Insolvency Process against Benaka Sponge Iron Private Limited due to a default of Rs. 1,87,95,291.51. The Adjudicating Authority admitted the petition on 07.03.2019, initiating CIRP and appointing Ms. Manjula B.S as IRP. A public announcement was made on 13.03.2018, inviting claims from parties against the Corporate Debtor. The IRP constituted a Committee of Creditors (CoC) with operational creditors, as there were no financial creditors. Six CoC meetings were held. The company's banker, IDBI, had classified the loan account as NPA effective from 31.10.2014. Production had ceased on 17.12.2015 due to unpaid electricity charges. The

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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 Corporate Debtor when there is no

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**Reasoning:** The Adjudicating Authority considered the financial status of the Corporate Debtor,

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**Interpretation:** The interpretation of the IBC allows for the dissolution of a Corporate Debtor

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**Application:** Given the absence of assets for liquidation and the nil liquidation value, the

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Respondents:** Benaka Sponge…; Agrawal Coal…

## Timeline

- **2014-10-31 — NPA Classif…**: IDBI classified the…
- **2015-12-17 — Production…**: The Company stopped its production due to…

## 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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