# In the matter of G K Steel and Allied Industries Ltd. CP-1006-IB-2018

> NCLT judgment dated 2019-12-20. Citation: TCN-2019-NCLT-00039. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 20 Dec 2019
- **Citation:** TCN-2019-NCLT-00039
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/g-k-steel-and-allied-industries-ltd-cp-1006-ib-2018-06442dee

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by IFCI Limited, the Financial Creditor, against M/s. G.K. Steels And Allied Industries Ltd., the Corporate Debtor, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor, along with IDBI and ICICI, had sanctioned term loans to the Corporate Debtor in 1988. The Corporate Debtor defaulted on repayments, leading to the loan account being declared a Non-Performing Asset (NPA) in 1998. Several legal proceedings ensued, including applications before the Debt Recovery Tribunal (DRT) and the Board for Industrial and Financial Reconstruction (BIFR). The Financial Creditor issued a loan recall notice in 1997 and invoked guarantees. The

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## Facts

IFCI Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against M/s. G.K. Steels And Allied Industries Ltd. (Corporate Debtor). The Financial Creditor, along with IDBI and ICICI, sanctioned a term loan of Rs.695 Lakhs to the Corporate Debtor on 11.03.1988 under the Project Finance Participation Scheme (PFPS). A loan agreement was entered on 11.07.1988. A deed of hypothecation was executed on 11.07.1988. A joint mortgage was executed on 17.09.1989. An additional loan of Rs.148 Lakhs was approved on 25.07.1991. A loan agreement for the second loan was entered on 11.03.1992. A deed of hypothecation was executed on 11.03.1992. A deed of guarantee was executed on 20.03.1992. The Financial Creditor issued a loan

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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:** The Supreme Court in Innoventive Industries Ltd. -Vs- ICICI Bank and another (2018) 1 SCC

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**Reasoning:** The court relied on the precedents set by the Supreme Court, which stated that if a

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

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**Application:** In this case, the Financial Creditor demonstrated the existence of a financial

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## Parties

- **Judges:** R. VARADH…; Anil Ku…
- **Respondents:** M/s. G.K. STEEL…
- **Advocates:** Vidyalakshm…; E. Om Pr…; +2 more

## Timeline

- **1988-03-11 — Term Loan San…**: IFCI Limited, along with IDBI and ICICI, sanctioned a term loan of Rs.695 Lakhs to the…
- **1988-07-11 — Loan Agre…**: A loan agreement was entered into between the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14(2) — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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