# 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-00845. 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-00845
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/bhagwandas-ispat-pvt-limited-cp-ib-no-222-chd-hry-2019-d93bbca2

## 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 repayments. 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) on 29.10.2014. The bank had granted total debt of ₹11,30,00,000/- under Cash Credit Facility and ₹28 lacs in bank guarantees. The outstanding amount as of 31.01.2019 was ₹16,54,72,358.04, including principal, unapplied interest, and charges, along with future interest at 14% per annum.

## Facts

Abhyudaya Co-operative Bank Limited 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 bank had extended credit facilities to the corporate debtor, including a cash credit facility of ₹11,30,00,000/- and bank guarantees. The corporate debtor defaulted on repayments, leading to the account being classified as a Non-Performing Asset (NPA) on 29.10.2014. As of 31.01.2019, the outstanding amount was ₹16,54,72,358.04, including principal, interest, and charges. The bank had also initiated securitization proceedings and acquired physical possession of the factory premises and sold plant and machinery. An arbitration claim 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 Code states that the Adjudicating Authority may admit an

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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 allows a financial creditor to initiate CIRP against a

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**Application:** In this case, the bank provided sufficient evidence of default, the application

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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 was…
- **2008-06-19 — Change of…**: 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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