# In the matter of Five Core Electronics Limited (IB)-1671(ND)2019

> NCLT judgment dated 2020-01-23. Citation: TCN-2020-NCLT-02202. Northern Arc Capital Limited, the Financial Creditor, filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 23 Jan 2020
- **Citation:** TCN-2020-NCLT-02202
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/five-core-electronics-limited-ib-1671nd2019-642f7401

## Summary

### Background

Northern Arc Capital Limited, the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Five Core Electronics Limited, the Corporate Debtor. The Financial Creditor claimed that the Corporate Debtor defaulted on a credit facility of Rs. 2,50,00,000 sanctioned on 13.03.2019, with an interest rate of 16% per annum, which would increase to 22% per annum in case of default. The Financial Creditor stated that the Corporate Debtor had executed a Facility Agreement and a Promissory Note on 13.03.2019. The repayment of the loan was scheduled to

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## Facts

Northern Arc Capital Limited (Financial Creditor) sanctioned a credit facility of Rs. 2,50,00,000 to Five Core Electronics Limited (Corporate Debtor) on 13.03.2019, with an interest rate of 16% per annum, escalating to 22% in case of default. A Facility Agreement and a Promissory Note were executed on the same date. The repayment was to commence on 25.04.2019. The Corporate Debtor failed to pay the first installment, leading the Financial Creditor to send reminders via email. The Corporate Debtor did not respond. The Financial Creditor filed a petition under Section 7 of the IBC, claiming a default exceeding Rs. 1 Lakh. The Corporate Debtor did not appear during the proceedings, and was proceeded against ex-parte. The Financial Creditor also executed a separate Deed of

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## Issues and analysis

### Issue 1: Whether the Financial Creditor has successfully established a default in payment of the financial …

**Ratio:** Section 7(5) of the IBC allows for the admission of an application if a default has

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**Reasoning:** The court found that the Financial Creditor had provided sufficient evidence, including

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

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**Application:** The court applied the provisions of Section 7(5) of the IBC to the facts

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## Parties

- **Judges:** Ina Mal…; L. N. G…
- **Appellants:** Northern Arc…
- **Respondents:** Five Core…

## Timeline

- **1989-03-09 — Incorporation of…**: Northern Arc Capital…
- **2002-04-11 — Incorporation of…**: Five Core Electronics…

## 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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