# In the matter of Bheema Cements Limited CP (IB) No. 97-7-HDB-2018

> NCLT judgment dated 2018-07-09. Citation: TCN-2018-NCLT-01173. JM Financial Asset Reconstruction Company Limited filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 9 Jul 2018
- **Citation:** TCN-2018-NCLT-01173
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/bheema-cements-limited-cp-ib-no-97-7-hdb-2018-4f25482b

## Summary

### Background

JM Financial Asset Reconstruction Company Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Bheema Cements Limited, the Corporate Debtor, due to outstanding debt. The Financial Creditor claimed that the Corporate Debtor defaulted on loan repayments, leading to the account being classified as NPA. The Corporate Debtor contested the petition, arguing that the Financial Creditor had not fulfilled its obligations under a Term Sheet, specifically the advancement of Rs. 70 crores for the company's revival. The Financial Creditor argued that the Corporate Debtor failed to provide 10% of the OTS amount for consideration.

## Facts

JM Financial Asset Reconstruction Company Limited (Financial Creditor) filed a petition against Bheema Cements Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Financial Creditor claimed that the Corporate Debtor defaulted on loan repayments, resulting in an outstanding debt of Rs. 88,65,96,630.95 as of 31.12.2017. The account was classified as NPA on 29.05.2014. The Corporate Debtor argued that the Financial Creditor failed to fulfill its obligations under a Term Sheet dated 21.11.2014, specifically the advancement of Rs. 70 crores for the company's revival. The Corporate Debtor also claimed that any dispute should be settled through arbitration. The Financial Creditor contended that the Term Sheet did not create any binding

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor committed a default under Section 7 of the Insolvency and Bankruptcy …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a corporate

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had availed loans from banks,

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**Interpretation:** Section 7 of the IBC is interpreted to mean that if a financial debt exists and

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**Application:** In this case, the Corporate Debtor's failure to repay the loans, as evidenced

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## Parties

- **Judges:** Ratakonda…
- **Appellants:** JM Financial…
- **Respondents:** Bheema Cements…; Bheema Ceme…
- **Advocates:** S. Niranjan…; Mr.V.V.S.…; +3 more

## Timeline

- **2010-01-01 — Working Capital…**: Working capital consortium was formed by Oriental Bank of Commerce, Axis Bank Ltd,…
- **2014-05-29 — Account Classified as…**: The account of Bheema Cements Limited was…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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