# 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-00045. The case involves an application filed by IFCI Limited under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 20 Dec 2019
- **Citation:** TCN-2019-NCLT-00045
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/g-k-steel-and-allied-industries-ltd-cp-1006-ib-2018-0d083fba

## Summary

### Background

The case involves an application filed by IFCI Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against M/s. G.K. Steel and Allied Industries Ltd. IFCI, along with IDBI and ICICI, had sanctioned term loans to G.K. Steel. The Corporate Debtor defaulted on repayments, leading to the loan account being declared a Non-Performing Asset (NPA). Several attempts at settlement, including One Time Settlement (OTS) offers, were made but failed. Prior to the IBC application, the Corporate Debtor was also subject to proceedings before the Board for Industrial and Financial Reconstruction (BIFR) and the Debt Recovery Tribunal (DRT).

## Facts

IFCI Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. G.K. Steel and Allied Industries Ltd. (Corporate Debtor). IFCI, along with IDBI and ICICI, had sanctioned term loans to the Corporate Debtor amounting to Rs.695 Lakhs in 1988. The Corporate Debtor defaulted on repayments, and the loan account was declared a Non-Performing Asset (NPA) on 01.03.1998. The Financial Creditor issued a loan recall notice on 01.09.1997, demanding Rs.2,26,44,413/-. The Corporate Debtor offered a One Time Settlement (OTS) on 14.10.2009, which was not fully complied with. The Corporate Debtor also filed an application under Section 15 of SICA, and proceedings

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, is …

**Ratio:** Section 7 of the IBC allows a Financial Creditor to initiate CIRP against a Corporate

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**Reasoning:** The court considered the submissions of both parties and examined the documents placed on

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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 found that there was a financial debt and a default exceeding Rs. 1

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## Parties

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

## Timeline

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

## 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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