# In the matter of Cosmos Forgings Limited CP (IB) No. 228-7-HDB-2020

> NCLT judgment dated 2021-08-26. Citation: TCN-2021-NCLT-01273. The case involves a company application filed by Affluence Engineering and Enterprises Limited…

- **Court:** NCLT
- **Order date:** 26 Aug 2021
- **Citation:** TCN-2021-NCLT-01273
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/cosmos-forgings-limited-cp-ib-no-228-7-hdb-2020-5ca55fe1

## Summary

### Background

The case involves a company application filed by Affluence Engineering and Enterprises Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Cosmos Forgings Limited (Corporate Debtor). The Financial Creditor and Corporate Debtor had a business relationship involving trading in steel and allied products. Due to financial stress, the Corporate Debtor failed to make payments, leading to an outstanding amount. A loan agreement was entered into between the parties, but the Corporate Debtor failed to fulfill its obligations.

## Facts

Affluence Engineering and Enterprises Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Cosmos Forgings Limited (Corporate Debtor). The Financial Creditor was incorporated in 2000, while the Corporate Debtor was incorporated in 1997. Both companies were involved in the business of trading in steel and allied products. The Corporate Debtor faced financial stress and failed to make regular payments, resulting in an outstanding amount of Rs. 20,32,65,257 as of September 11, 2017. A loan agreement was entered into on December 10, 2017, stipulating repayment in 8 quarterly installments with 12% interest per annum. The Corporate Debtor defaulted on

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## Issues and analysis

### Issue 1: Whether the application for initiation of Corporate Insolvency Resolution Process (CIRP) against …

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

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**Reasoning:** The Adjudicating Authority considered the submissions of both parties and the evidence

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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 Financial Creditor demonstrated the existence of a debt and a

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## Parties

- **Judges:** Madan B.…; BINOD KUMAR…
- **Appellants:** Affluence…
- **Respondents:** Cosmos Forgings…; Cosmos Forgings…

## Timeline

- **2017-09-11 — Outstanding…**: As of this date, the Corporate Debtor had an…
- **2017-12-10 — Loan Agre…**: A loan agreement was entered into between 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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