# In the matter of Gopalsons Steels Pvt. Ltd. C.P. No. IB-1789 (ND)-2019

> NCLT judgment dated 2020-01-20. Citation: TCN-2020-NCLT-02260. Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 20 Jan 2020
- **Citation:** TCN-2020-NCLT-02260
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/gopalsons-steels-pvt-ltd-cp-no-ib-1789-nd-2019-aec2e3cd

## Summary

### Background

Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Ms. Gopalsons Steels Pvt. Ltd. Canara Bank, a public limited banking company, claimed that Ms. Gopalsons Steels Pvt. Ltd. had defaulted on credit facilities and term loans.

## Facts

Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Ms. Gopalsons Steels Pvt. Ltd. The application was based on the corporate debtor's default in repaying credit facilities and term loans. The corporate debtor had approached Canara Bank for credit facilities, including OCC (Hypothecation), CBD, ILC/FLC, adhoc limit, and a term loan for construction, purchase of machinery, and general corporate needs. Canara Bank disbursed a total of Rs 2,913 Lakhs. The term loan was to be repaid in 84 monthly installments with interest at 13.95% compounded monthly, plus penal interest of 2% p.a. in case of default. The credit facility was to be repaid as per demand with interest

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

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

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**Reasoning:** The tribunal observed that the application was filed in the prescribed format under Rule

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

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**Application:** The tribunal found that the application was complete and met the requirements

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## Parties

- **Judges:** DEEPTI M…; HEMANT KUMAR…
- **Appellants:** Canara…
- **Respondents:** Gopalsons Steels…

## Timeline

- **2004-10-27 — Board Reso…**: A board resolution was passed by the corporate debtor authorizing the managing Director…
- **2014-01-24 — Power of At…**: Mr. Deepak Goyal was authorized vide Power of Attorney to trigger Corporate Insolvency…

## 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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