# In the matter of Chartered Mercantile MB Ltd. Company Petition (IB)No. 506-ALD-2019

> NCLT judgment dated 2021-07-08. Citation: TCN-2021-NCLT-01803. The case involves a petition filed by a financial creditor, M/S Supreme Industries Limited,…

- **Court:** NCLT
- **Order date:** 8 Jul 2021
- **Citation:** TCN-2021-NCLT-01803
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/chartered-mercantile-mb-ltd-company-petition-ibno-506-ald-2019-17ab800c

## Summary

### Background

The case involves a petition filed by a financial creditor, M/S Supreme Industries Limited, under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, M/S Chartered Mercantile M.B. LTD. The petition is based on the corporate debtor's inability to liquidate its financial debt. The financial creditor had supplied goods to purchasers based on purchase orders, and a deed of guarantee was executed between the corporate debtor and the financial creditor. The purchasers failed to make full payment, leading to outstanding dues.

## Facts

M/S Supreme Industries Limited, the financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/S Chartered Mercantile M.B. LTD, the corporate debtor, due to its inability to liquidate its financial debt. A deed of guarantee was executed between the corporate debtor and the financial creditor on 2018-06-20. The financial creditor supplied goods to purchasers based on purchase orders, with the total amount of goods supplied from 2018-04-07 to 2018-07-20 amounting to Rs. 1,30,11,821. The purchasers were required to make 100% payment within 30 days of dispatch, with interest charges of 24% p.a. on outstanding amounts. The last dispatch date was 2018-07-20, making the payment due on 2018-08-20. The purchasers paid Rs.

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## Issues and analysis

### Issue 1: Whether there is duly …

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

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**Reasoning:** The court examined the documents and averments made in the application to determine if a

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**Interpretation:** The existence of a financial debt is a prerequisite for initiating CIRP under

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**Application:** The court found that the documents presented by the financial creditor

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## Parties

- **Judges:** Rajesh Daya…
- **Appellants:** M/S SUPREME…
- **Respondents:** M/S CHARTERED…

## Timeline

- **2018-06-20 — Deed of Gua…**: Deed of guarantee entered and executed between the Corporate Debtor and the financial…
- **2018-04-07 — Goods Sup…**: Applicants sold, supplied and delivered goods…

## 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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