# In the matter of Electroworld Digital Solutions Ltd. CP-511-I&BP-NCLT-MAH-2018

> NCLT judgment dated 2018-09-05. Citation: TCN-2018-NCLT-00824. State Bank of India filed a Company Petition under Section 7 of the Insolvency & Bankruptcy…

- **Court:** NCLT
- **Order date:** 5 Sept 2018
- **Citation:** TCN-2018-NCLT-00824
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/electroworld-digital-solutions-ltd-cp-511-ibp-nclt-mah-2018-8d619ede

## Summary

### Background

State Bank of India filed a Company Petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC) against Electroworld Digital Solutions Limited, the Corporate Debtor, to initiate Corporate Insolvency Resolution Process (CIRP). The grounds for the petition were based on the Corporate Debtor's default in making payment of ₹456.90 crores as of December 31, 2017, under the Rupee Term Loan Agreements (RTL). The petitioner argued that the Corporate Debtor was jointly and severally liable as Obligor/Co-obligor with 12 other Videocon group companies to repay the loan granted under RTL. The petitioner also submitted that several banks, including State Bank of Hyderabad, State Bank of Mysore, State Bank of Travancore, State Bank of Bikaner and Jaipur, and State

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## Facts

State Bank of India (SBI), the Financial Creditor, filed a petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC) against Electroworld Digital Solutions Limited, the Corporate Debtor, to initiate Corporate Insolvency Resolution Process (CIRP). The petition was based on the Corporate Debtor's default in payment of ₹456.90 crores as of December 31, 2017, under the Rupee Term Loan Agreements (RTL). The Corporate Debtor was allegedly jointly and severally liable as Obligor/Co-obligor with 12 other Videocon group companies. The RTL agreement was dated August 8, 2012. Several banks, including State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Bikaner and Jaipur (SBBJ), and State Bank of Punjab (SBP),

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## Issues and analysis

### Issue 1: Whether the petition filed by State Bank of India under Section 7 of the Insolvency & …

**Ratio:** The legal principle is that a financial creditor can initiate CIRP against a corporate

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**Reasoning:** The NCLT reasoned that the RTL Agreement entered between the Banks and the specified

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The NCLT applied the principle that the Corporate Debtor, being a party to the

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## Parties

- **Judges:** B.S.V. Prakash…; RavikumarDu…
- **Appellants:** State Bank of…
- **Respondents:** Electroworld…
- **Advocates:** Animesh…; Madhav Ka…; +5 more

## Timeline

- **2012-08-08 — Rupee Term Loan (RTL)…**: The Rupee Term Loan (RTL) Agreement was dated 8.8.2012, with the Corporate Debtor and…
- **2017-02-22 — Gazette Notif…**: Gazette Notification dated 22nd February 2017, regarding the merger of State Bank of…

## 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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