# In the matter of Bhagwandas Ispat Pvt. Limited CP (IB) No. 222-Chd-Hry-2019

> NCLT judgment dated 2019-10-23. Citation: TCN-2019-NCLT-00840. Abhyudaya Co-operative Bank Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 23 Oct 2019
- **Citation:** TCN-2019-NCLT-00840
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/bhagwandas-ispat-pvt-limited-cp-ib-no-222-chd-hry-2019-d07f860c

## Summary

### Background

Abhyudaya Co-operative Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Bhagwandas Ispat Pvt. Ltd. The bank claimed that the corporate debtor had defaulted on its loan repayment obligations. The application was filed due to the corporate debtor's failure to keep its cash credit account regular, leading to its classification as a Non-Performing Asset (NPA). The bank had granted the corporate debtor a total debt of ₹11,30,00,000 under a Cash Credit Facility and ₹930 lacs via bank guarantee. The corporate debtor was declared NPA on 29.10.2014.

## Facts

Abhyudaya Co-operative Bank Limited (the 'Bank') filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Bhagwandas Ispat Pvt. Ltd. (the 'Corporate Debtor'). The Bank had extended credit facilities to the Corporate Debtor, including a Cash Credit Facility of ₹11,30,00,000 and bank guarantees of ₹930 lacs. Due to defaults in payment, the Corporate Debtor's account was classified as a Non-Performing Asset (NPA) on 29.10.2014. The total outstanding amount as of 31.01.2019 was ₹16,54,72,358.04, including principal, unapplied interest, and charges, along with pendent lite and future interest at 14% per annum. The Bank had also initiated arbitration proceedings against the Corporate

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

**Ratio:** Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016, stipulates that the

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**Reasoning:** The court found that the occurrence of default was evidenced by the details furnished by

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

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**Application:** In this case, the court applied the provisions of Section 7(5)(a) of the IBC to

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## Parties

- **Judges:** Ajay Kumar…; Pradeep R.…
- **Appellants:** Abhyudaya…
- **Respondents:** Bhagwandas Ispat…; M/s. Bhagwandas…

## Timeline

- **1988-09-05 — Incorporation of…**: The Corporate Debtor, initially named Amar…
- **2008-06-19 — Name Cha…**: The name of the corporate debtor was changed from Amar Ispat Private Limited to…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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