# In the matter of Exclusive Fibers Ltd. (IB)-1650(ND)-2018

> NCLT judgment dated 2019-03-28. Citation: TCN-2019-NCLT-04278. Corporation Bank, acting as the Financial Creditor, filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 28 Mar 2019
- **Citation:** TCN-2019-NCLT-04278
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/exclusive-fibers-ltd-ib-1650nd-2018-10d8d384

## Summary

### Background

Corporation Bank, acting as the Financial Creditor, filed a petition under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against M/s. Exclusive Fibres Ltd., the Corporate Debtor, due to its inability to liquidate its debt. The Corporate Debtor had availed financial assistance from the bank for setting up a manufacturing plant. The bank extended credit facilities to the Corporate Debtor, which were subsequently enhanced. The Corporate Debtor failed to adhere to the terms of availment and repayment schedule, leading to the loan accounts being classified as Non-Performing Assets (NPA).

## Facts

Corporation Bank extended financial assistance to M/s. Exclusive Fibres Ltd. for setting up a manufacturing plant. Credit facilities were initially granted for Rs. 25 crores on 2012-10-16, with a sub-limit of Rs. 10 crores for a One Time Letter of Credit Facility under a Term Loan Agreement dated 2012-10-16. The total exposure of the bank was enhanced to Rs. 51.88 crores. The Corporate Debtor failed to adhere to the repayment schedule, leading to the loan accounts being classified as NPA on 2018-01-15. The outstanding amount as of 2018-10-30 was over Rs. 41.2 crores, acknowledged by the Corporate Debtor. A notice under Section 13(2) of the SARFAESI Act was sent on 2018-04-27. The Corporate Debtor claimed exorbitant interest rates.

## Issues and analysis

### Issue 1: Whether the petition filed by the Financial Creditor under Section 7 of the Insolvency & …

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

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**Reasoning:** The court considered the facts presented by the Financial Creditor, including the

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**Interpretation:** Section 7 of the IBC provides a mechanism for financial creditors to recover

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**Application:** Based on the facts and circumstances, the court found that the Corporate Debtor

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## Parties

- **Judges:** Ina Mal…; V.K. SUB…
- **Appellants:** Corporatio…
- **Respondents:** M/s. Exclusive…
- **Advocates:** Alok K…; Somya Y…; +3 more

## Timeline

- **2012-10-16 — Initial Credit…**: Corporate Debtor was initially granted credit facilities for Rs. 25 crores with a…
- **2018-01-15 — Loan Accounts…**: The loan accounts of the Corporate Debtor…

## 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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