# In the matter of Chaudhary Ingots Pvt. Ltd. Company Petition (IB)No. 356-ALD-2019

> NCLT judgment dated 2020-01-03. Citation: TCN-2020-NCLT-02527. The present petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 3 Jan 2020
- **Citation:** TCN-2020-NCLT-02527
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/chaudhary-ingots-pvt-ltd-company-petition-ibno-356-ald-2019-719b6b18

## Summary

### Background

The present petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to its inability to liquidate its financial debt. The Corporate Debtor and the applicant had entered into a loan facility agreement dated 2018-11-01, where a loan of Rs. 63,00,000 was disbursed. The Corporate Debtor was obligated to repay the amount by 2019-04-30 with 15% interest compounded annually and a 2% penal interest on defaulted amounts. The Corporate Debtor defaulted, and the financial creditor demanded payment via a letter dated 2019-05-04, to which a reply was received on 2019-05-08.

## Facts

On 2018-11-01, Shriyank Wadhawa (Applicant/Financial Creditor) and Chaudhary Ingots Pvt. Ltd. (Respondent/Corporate Debtor) entered into a loan facility agreement. The applicant disbursed a loan of Rs. 63,00,000 to the corporate debtor. The corporate debtor was obligated to repay the entire amount by 2019-04-30, along with 15% annual interest compounded annually and a 2% penal interest on defaulted amounts. The corporate debtor defaulted on the payment. The financial creditor sent a demand letter on 2019-05-04, and a reply was received on 2019-05-08. The corporate debtor admitted the default in the counter affidavit, citing financial difficulties. The application under Section 7 of IBC was filed in August 2019.

## Issues and analysis

### Issue 1: Whether there is a duly …

**Ratio:** Section 7(1) of the Insolvency and Bankruptcy Code, 2016 requires the financial

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**Reasoning:** The court found that the loan agreement and the disbursed amount established the

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

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**Application:** The loan agreement dated 2018-11-01 and the disbursement of Rs. 63,00,000

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## Parties

- **Judges:** Rajesh Daya…
- **Appellants:** Shriyank W…
- **Respondents:** Chaudhary Ingots…

## Timeline

- **2018-11-01 — Loan Agre…**: Loan facility agreement entered between…
- **2019-04-30 — Due Date…**: Date on which the…

## 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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