# In the matter of Eagle Cotton Private Limited CP (IB) No. 458-7-NCLT-AHM-2018

> NCLT judgment dated 2019-07-19. Citation: TCN-2019-NCLT-02429. The case pertains to an application filed by Bank of India under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 19 Jul 2019
- **Citation:** TCN-2019-NCLT-02429
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/eagle-cotton-private-limited-cp-ib-no-458-7-nclt-ahm-2018-6416fe52

## Summary

### Background

The case pertains to an application filed by Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Eagle Cotton Pvt. Ltd., the Corporate Debtor. The bank claimed that the corporate debtor defaulted on loan repayments, leading to the account being classified as a Non-Performing Asset (NPA) on 31.12.2015. The bank sought to recover outstanding dues exceeding Rs. 28 crores.

## Facts

Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Eagle Cotton Pvt. Ltd. The bank claimed that Eagle Cotton Pvt. Ltd. defaulted on loan repayments, leading to the account being classified as a Non-Performing Asset (NPA) on 31.12.2015. The outstanding dues exceeded Rs. 28 crores. The bank had sanctioned various credit facilities, including term loans and cash credit facilities, to Eagle Cotton Pvt. Ltd., secured by hypothecation of stock and book debts, and guarantees. The corporate debtor company had executed necessary security documents, including a deed of guarantee. The corporate debtor raised objections, including disputes over the default amount, the

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

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

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**Reasoning:** The Adjudicating Authority (NCLT) found that the corporate debtor had defaulted on its

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**Interpretation:** Section 7 of the I&B Code provides the legal basis for a financial creditor

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**Application:** In this case, the bank, as a financial creditor, filed an application under

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## Parties

- **Judges:** Harihar Prakash…; Manorama…
- **Appellants:** Bank of…
- **Respondents:** Eagle Cotton Pvt.…

## Timeline

- **2015-12-31 — Account Classified as…**: The loan account of Eagle Cotton Pvt. Ltd. was classified as a Non-Performing Asset (NPA)…
- **2018-01-01 — CP (IB) No. 458/7/NCLT/A…**: The present Application is filed under Section 7 of the Insolvency and Bankruptcy Code,…

## 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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