# In the matter of Cosmic Ferro Alloys Ltd. CP (IB) No. 596-KB-2017

> NCLT judgment dated 2018-01-16. Citation: TCN-2018-NCLT-01927. Citibank NA filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 16 Jan 2018
- **Citation:** TCN-2018-NCLT-01927
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/cosmic-ferro-alloys-ltd-cp-ib-no-596-kb-2017-33fdb19b

## Summary

### Background

Citibank NA filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate a corporate insolvency resolution process against Cosmic Ferro Alloys Ltd. Citibank NA claimed that Cosmic Ferro Alloys Ltd. had defaulted on a payment of Rs. 13,19,53,425.78. The corporate debtor, Cosmic Ferro Alloys Ltd., objected to the application, alleging abuse of process and suppression of material facts. The financial creditor, Citibank NA, argued that the corporate debtor had taken various financial credit facilities and defaulted on payments.

## Facts

Citibank NA, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Cosmic Ferro Alloys Ltd., the corporate debtor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was based on the corporate debtor's alleged default in making a payment of Rs. 13,19,53,425.78. The total debt granted and disbursed by Citibank NA to Cosmic Ferro Alloys Ltd. was Rs. 20,00,00,000 on 2011-10-10, which was later decreased to Rs. 12,00,00,000. The corporate debtor contested the application, claiming it was an abuse of the process of law and that the applicant had suppressed material facts. Citibank NA submitted that the corporate debtor had taken various financial credit facilities and defaulted on

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## Issues and analysis

### Issue 1: Whether the application filed by the financial creditor under Section 7 of the Insolvency and …

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

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**Reasoning:** The court considered the documents filed by the financial creditor, including the

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** In this case, the court found that the financial creditor had provided

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## Parties

- **Judges:** V. P. S…; Jinan…
- **Appellants:** Citiban…
- **Respondents:** Cosmic Ferro…

## Timeline

- **2009-06-15 — Working capital…**: Working capital consortium agreement dated 15/6/2009 annexed with the application…
- **2011-10-10 — Total debt…**: Applicant stated that the total debt granted and disbursed by the Bank to the corporate…

## 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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