# In the matter of Dharani Sugars and Chemicals Limited IBA-976-2019

> NCLT judgment dated 2021-07-29. Citation: TCN-2021-NCLT-01547. Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 29 Jul 2021
- **Citation:** TCN-2021-NCLT-01547
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/dharani-sugars-and-chemicals-limited-iba-976-2019-a897f7a3

## Summary

### Background

Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Dharani Sugars & Chemicals Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The application was based on the Corporate Debtor's default in repayment of financial debt. The Corporate Debtor had availed various financial assistances from the Financial Creditor and other lenders. The Corporate Debtor's operations came under strain, leading to a request for restructuring, which was referred to Corporate Debt Restructuring (CDR). A Master Restructuring Agreement (MRA) was executed on 30.01.2015. However, the Corporate Debtor failed to adhere to the amortisation schedule set out in the MRA, resulting in defaults. The Financial

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## Facts

Bank of India, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Dharani Sugars & Chemicals Limited, the Corporate Debtor. The Corporate Debtor is a company incorporated under the Companies Act, 1956, with three integrated sugar plants and a co-generation power plant. The Financial Creditor had originally sanctioned a sum of Rs.60 Crore for expansion of Unit - 3. The Corporate Debtor had requested the Financial Creditor and other lenders for restructuring its existing facilities, and the Corporate Debtor was referred to Corporate Debt Restructuring (CDR). A Master Restructuring Agreement (MRA) was executed on 30.01.2015. The Corporate Debtor did not adhere to the amortisation schedule set out in the

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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:** In case of a 'financial debt' which is due and in the event of 'default' as defined under

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**Reasoning:** The Tribunal found that the Corporate Debtor had committed default in repayment, which

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**Interpretation:** The Insolvency and Bankruptcy Code, 2016, mandates the admission of an

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**Application:** The Tribunal applied the ratio to the facts of the case, noting that the

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## Parties

- **Judges:** R. Sucha…; Anil Ku…
- **Appellants:** Bank of…
- **Respondents:** Dharani Sugars…; M/s. Dharani…

## Timeline

- **1956-01-01 — Incorpor…**: Corporate Debtor incorporated…
- **2014-12-30 — CDR Appr…**: CDR Empowered Group approved…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14(1) — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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