# 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-00456. The case involves an application (C.P. (IB)No.166/BB/2018) filed under Section 9 of the IBC,…

- **Court:** NCLT
- **Order date:** 26 Nov 2019
- **Citation:** TCN-2019-NCLT-00456
- **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-cbc8e4f6

## Summary

### Background

The case involves an application (C.P. (IB)No.166/BB/2018) filed under Section 9 of the IBC, 2016, by Agrawal Coal Corporation Private Limited against Benaka Sponge Iron Private Limited, seeking to initiate Corporate Insolvency Resolution Process (CIRP). I.A.No.568 of 2019 was filed by the Interim Resolution Professional (IRP) seeking to consider and approve the dissolution of Benaka Sponge Iron Private Limited. The petition was admitted on 07.03.2019, initiating CIRP and appointing Ms. Manjula B.S as IRP. Public announcement was made on 13.03.2018 inviting claims against the Corporate Debtor.

## Facts

Agrawal Coal Corporation Private Limited filed C.P.(IB)No.166/BB/2018 under Section 9 of the IBC, 2016, against Benaka Sponge Iron Private Limited, claiming a default of Rs.1,87,95,291.51/-. The petition was admitted on 07.03.2019, initiating CIRP and appointing Ms. Manjula B.S as IRP. A public announcement was made on 13.03.2018. The IRP constituted a Committee of Creditors (CoC) comprising operational creditors. Six CoC meetings were held. The company's banker, IDBI, had classified the loan account as NPA with effect from 31.10.2014. The company had stopped production from 17.12.2015 due to non-payment of electricity charges. A reference was made to BIFR. The assets were sold under the SARFAESI Act by RBL on 03.09.2018. The valuation report submitted by two

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority should dissolve the Corporate Debtor, Benaka Sponge Iron Private …

**Ratio:** The Adjudicating Authority has inherent powers under Rule 11 of NCLT Rules, 2016, to pass

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**Reasoning:** The court reasoned that continuing the CIRP or liquidation process would serve no

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**Interpretation:** Rule 11 of NCLT Rules, 2016, grants the Adjudicating Authority broad

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**Application:** Given the facts that Benaka Sponge Iron Private Limited has no assets, its loan

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## Parties

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

## 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 filed by Agrawal Coal Corporation Private Limited was admitted, initiating…

## 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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