# In the matter of Ess Dee Aluminium Limited CP(IB)No. 1284-KB-2019

> NCLT judgment dated 2020-02-14. Citation: TCN-2020-NCLT-01954. The State Bank of India, as the Financial Creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 14 Feb 2020
- **Citation:** TCN-2020-NCLT-01954
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ess-dee-aluminium-limited-cpibno-1284-kb-2019-add4b410

## Summary

### Background

The State Bank of India, as the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Ess Dee Aluminium Limited, the Corporate Debtor. The application was filed due to the Corporate Debtor's default in paying a financial debt of Rs. 4,69,84,98,431/-. The bank had granted and disbursed term loan and cash credit facilities to the Corporate Debtor, which were increased over time at the request of the Corporate Debtor. The loan account was declared NPA, and a notice under Section 13(2) of the SURFAESI Act, 2002, was served. The Corporate Debtor appeared in the matter but did not contest the proceedings.

## Facts

State Bank of India (SBI) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Ess Dee Aluminium Limited. SBI claimed that Ess Dee Aluminium Limited defaulted on a financial debt of Rs. 4,69,84,98,431/-. SBI had granted and disbursed term loan and cash credit facilities to Ess Dee Aluminium Limited, initially amounting to Rs. 21.89 Crore in 2005. These facilities were increased over time, reaching Rs. 424.80 Crore by 29.03.2016. The loan account was declared a Non-Performing Asset (NPA). On 31.03.2017, Ess Dee Aluminium Limited admitted the debt but failed to pay. SBI served a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and

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

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**Reasoning:** The NCLT found that the Corporate Debtor had defaulted on a financial debt of more than

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

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**Application:** The NCLT applied Section 7 to the facts of the case, noting the undisputed

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Respondents:** Ess Dee Aluminium…

## Timeline

- **2005-01-01 — Initial Loan…**: SBI granted and disbursed term loan and cash credit facilities to Ess Dee Aluminium…
- **2015-09-24 — Extension of Repayment…**: The term loan and cash credit facility…

## Legal provisions

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

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