# In the matter of Cox & Kings Financial Services Limited CP No. 1011-(IB)-MB-V-2020

> NCLT judgment dated 2021-05-07. Citation: TCN-2021-NCLT-02178. Yes Bank Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 7 May 2021
- **Citation:** TCN-2021-NCLT-02178
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/cox-kings-financial-services-limited-cp-no-1011-ib-mb-v-2020-10186bfc

## Summary

### Background

Yes Bank Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Cox & Kings Financial Services Limited, alleging default in payment of a financial debt. The petitioner sought to initiate Corporate Insolvency Resolution Process (CIRP) against the respondent. The respondent argued that the statements of accounts produced by the petitioner were forged and incomplete, and that the elements of Section 3(11) of the Code were not satisfied. The respondent also claimed that the stamp duty paid on the Deed of Hypothecation was insufficient. The petitioner contended that the facilities were interchangeable between Working Capital Demand Loan (WCDL) and Cash Credit (CC) and that the respondent had defaulted on both facilities.

## Facts

Yes Bank Limited sanctioned two facilities to Cox & Kings Financial Services Limited: a Working Capital Demand Loan (WCDL) of ₹. 350,00,00,000/- on 2018-09-11 and an Additional Cash Credit of ₹. 50,00,00,000/- on 2019-03-01. These facilities were secured by hypothecation deeds dated 2018-10-16 and 2019-05-20. Personal guarantees were executed by Mr. Ajay Kerkar and Mrs. Urmila Kerkar in favor of Yes Bank. The respondent defaulted on an amount of ₹. 445,51,56,342.32/- as on 2019-08-01 for WCDL and 2019-10-01 for Cash Credit Facility. A loan recall notice was sent by the petitioner on 2019-12-11 demanding payment of ₹.418,67,03,036.47/-. The respondent claimed that the statements of accounts produced by the petitioner were forged and incomplete. The petitioner argued

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## Issues and analysis

### Issue 1: Whether the Petitioner has furnished Form No. 1 under Rule 4 of the Insolvency and Bankruptcy …

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

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**Reasoning:** The court examined the petitioner's application and supporting documents to determine

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The court found that the petitioner had indeed furnished Form No. 1 and invoked

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## Parties

- **Judges:** Janab Mohammed…; Chandra Bha…
- **Appellants:** Yes Bank L…
- **Respondents:** Cox & Kings…

## Timeline

- **2018-08-02 — Scheme of Demerger…**: The Hon'ble Tribunal approved the scheme…
- **2018-09-11 — Working Capital Demand…**: Yes Bank sanctioned a Working Capital Demand Loan of ₹. 350,00,00,000/- to Cox & Kings…

## 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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