# In the matter of Chhaparia Industries Pvt. Ltd.

> NCLT judgment dated 2017-02-24. Citation: TCN-2017-NCLT-00964. The Petitioner filed a corporate debtor petition under Section 10 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 24 Feb 2017
- **Citation:** TCN-2017-NCLT-00964
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/chhaparia-industries-pvt-ltd-6a84fb6a

## Summary

### Background

The Petitioner filed a corporate debtor petition under Section 10 of the Insolvency and Bankruptcy Code, stating that the debtor company, Chhaparia Industries Pvt. Ltd., defaulted in repaying debt amounting to Rs. 38,35,31,000 as of 03.02.2015. The company sought a declaration of moratorium due to its inability to discharge its debts. The financial creditor, J & K Bank, had sanctioned a loan facility of ₹41.50 crores, but the company failed to discharge this liability. Consequently, the financial creditor issued a notice under Section 13(2) of the SARFAESI Act on 03.02.2015. The petitioner company had also initiated proceedings before BIFR, which declared it a sick company by reference no. 48/2015.

## Facts

Chhaparia Industries Pvt. Ltd. defaulted on a debt of Rs. 38,35,31,000 as of 03.02.2015. J & K Bank, a financial creditor, had sanctioned a loan facility of ₹41.50 crores to the company. Due to the default, J & K Bank issued a notice under Section 13(2) of the SARFAESI Act on 03.02.2015. The company had initiated proceedings before BIFR and was declared a sick company under reference no. 48/2015. J & K Bank assigned the loan to Asset Care and Reconstruction Enterprises Ltd. for ₹19 crores on 02.02.2017. The debtor company filed a copy of registration of charge dated 25.09.2013 issued by ROC, Mumbai. The company also filed a list of assets and liabilities and details of security created against the loans. The petitioner has given the name of the interim

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## Issues and analysis

### Issue 1: Whether the corporate debtor, Chhaparia Industries Pvt. Ltd., committed a default in repaying its …

**Ratio:** Section 10 of the Insolvency and Bankruptcy Code, 2016 allows a corporate debtor to

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**Reasoning:** The court noted that the debtor company had defaulted in repaying a debt of Rs.

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**Interpretation:** Section 10 provides a mechanism for corporate debtors facing financial distress

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**Application:** In this case, the debtor company's failure to repay the debt of Rs.

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## Parties

- **Judges:** B.S.V. Prakash…; V. Nallasen…
- **Respondents:** Chhaparia…

## Timeline

- **2015-02-03 — Default…**: Debtor company defaulted in repaying…
- **2015-02-03 — SARFAESI…**: Financial creditor issued a notice under…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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