# In the matter of Butta Infrastructure Private Ltd. CP (IB) No. 325-7-HDB-2020

> NCLT judgment dated 2021-03-01. Citation: TCN-2021-NCLT-02887. LIC Housing Finance Limited (LIC HFL) filed an application under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 1 Mar 2021
- **Citation:** TCN-2021-NCLT-02887
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/butta-infrastructure-private-ltd-cp-ib-no-325-7-hdb-2020-13d556f2

## Summary

### Background

LIC Housing Finance Limited (LIC HFL) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against Butta Infrastructure Private Ltd, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The application was based on a default in loan repayment. Butta Infrastructure Private Ltd had approached LIC HFL for loans for rental discounting, which LIC HFL approved. Loan Agreements were notarized, and the borrowers offered to mortgage properties in favor of LIC HFL. Tripartite Agreements were entered into between the borrower, lessee/licensee, and LIC HFL for deposit of rent/license fee. An Escrow Agreement was also executed. The entire loan amount was disbursed by LIC HFL to enable the Corporate Debtor to close existing

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## Facts

LIC Housing Finance Limited (LIC HFL) extended loans totaling Rs. 310,00,00,000 to Butta Infrastructure Private Ltd for rental discounting purposes. The loans were secured by mortgages and governed by loan agreements, tripartite agreements, and an escrow agreement. Butta Infrastructure Private Ltd defaulted on loan repayments after 15.01.2019, with the outstanding amount reaching Rs. 364,54,26,112 as of 30.07.2020. LIC HFL issued demand notices, but the defaults persisted. Butta Infrastructure Private Ltd proposed a One Time Settlement (OTS) of Rs. 110 crores, which LIC HFL rejected. Butta Infrastructure Private Ltd cited demonetization, GST, and non-payment of rentals by Meridian Educational Society as reasons for its financial difficulties. LIC HFL initiated

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## Issues and analysis

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

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code (IBC) allows a financial creditor to

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**Reasoning:** The court found that the Financial Creditor had disbursed loans under two accounts and

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**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to determine whether a

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**Application:** In this case, the court found that LIC HFL had disbursed loans to Butta

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## Parties

- **Judges:** Bhaskara Pantula…; Veera Brahma Rao…
- **Appellants:** LIC Housing…
- **Respondents:** Butta Infrastructu…

## Timeline

- **2018-03-26 — Credit Sanctio…**: LIC HFL approved loans to Butta Infrastructure…
- **2018-03-28 — Loan Agreements…**: Loan Agreements between LIC HFL and Butta…

## 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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