# In the matter of Chandra Royal Inn Pvt. Ltd. CP-749-(IB)-CB-2018

> NCLT judgment dated 2018-09-06. Citation: TCN-2018-NCLT-00811. The case involves a company petition filed by M/s. Small Industrial Development Bank of India…

- **Court:** NCLT
- **Order date:** 6 Sept 2018
- **Citation:** TCN-2018-NCLT-00811
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/chandra-royal-inn-pvt-ltd-cp-749-ib-cb-2018-a49c7690

## Summary

### Background

The case involves a company petition filed by M/s. Small Industrial Development Bank of India (SIDBI), the Financial Creditor, against M/s. Chandra Royal Inn Private Limited, the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016. SIDBI sought to initiate Corporate Insolvency Resolution Process (CIRP) due to the Corporate Debtor's default on loan repayments. The Corporate Debtor had obtained credit facilities from SIDBI in 2012 for setting up a hotel. The Financial Creditor sanctioned a term loan, which was later modified. The Corporate Debtor failed to commence commercial operations as per the agreed timeline and requested extensions and additional moratoriums. The Financial Creditor also initiated recovery proceedings under the SARFAESI Act.

## Facts

M/s. Small Industrial Development Bank of India (SIDBI) extended credit facilities to M/s. Chandra Royal Inn Private Limited for establishing a 2-star hotel. A term loan of Rs. 2,75,00,000/- was sanctioned under the Direct Credit Scheme, with an interest rate of 0.5% above the financial creditor's prime lending rate. The Corporate Debtor was to repay the loan in 72 monthly installments after a 12-month moratorium. The project's commercial operations were to commence by December 2012. The Corporate Debtor requested an extension of the commencement date and an additional moratorium due to project delays. SIDBI provided an additional loan of Rs. 1,34,00,000/- due to cost overruns. The Corporate Debtor defaulted on its financial debt, which became due and payable on

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The Adjudicating Authority examined the documents and submissions made by the Financial

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**Interpretation:** The term 'default' under the IBC is interpreted to mean non-payment of debt

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**Application:** The Corporate Debtor's failure to repay the loan amount of Rs. 6,54,34,903/- by

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## Parties

- **Judges:** K. Anantha…; S. VIJAYARA…
- **Appellants:** M/s. Small…
- **Respondents:** M/s. Chandra…

## Timeline

- **2011-09-26 — Loan Applic…**: Corporate Debtor made an…
- **2012-01-23 — Letter of Inten…**: Financial Creditor issued a letter of intent agreeing in principle to sanction a term…

## 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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