# In the matter of GPI Textiles Limited CP (IB) No.35-Chd-HP-2018

> NCLT judgment dated 2018-07-06. Citation: TCN-2018-NCLT-01183. Phoenix Arc Private Limited, acting as a trustee, filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 6 Jul 2018
- **Citation:** TCN-2018-NCLT-01183
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/gpi-textiles-limited-cp-ib-no35-chd-hp-2018-308d6364

## Summary

### Background

Phoenix Arc Private Limited, acting as a trustee, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against GPI Textiles Limited, a company engaged in manufacturing cotton yarns, polyester yarn, and blended yarn. The petition was based on a default in repayment of loan facilities granted by The Hongkong and Shanghai Banking Corporation Ltd. (HSBC), which were later assigned to Phoenix Arc. The respondent contested the petition, alleging fraud, illegal assignment, and non-compliance with RBI guidelines.

## Facts

GPI Textiles Limited was incorporated on 29.09.2000 and is engaged in the business of manufacturing cotton yarns, polyester yarn, and blended yarn. HSBC granted working capital and term loan facilities to GPI Textiles, evidenced by a sanction letter dated 24.03.2009 for ₹129,02,00,000. A Corporate Rupee Loan Facility Agreement was executed on 08.04.2009. Due to defaults in repayment, the account was classified as NPA on 01.03.2012 by HSBC. On 21.03.2012, HSBC assigned the debts to Phoenix Arc Private Limited. The respondent claims the assignment was illegal and fraudulent, violating RBI guidelines. The outstanding dues as of 26.12.2017 were ₹268,29,20,033. The respondent also entered into an arrangement with GL Asia Mauritius-II Ltd. (GLAM), which arranged ₹129 Crores

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## Issues and analysis

### Issue 1: Whether Phoenix Arc Private Limited is a financial creditor as defined under Section 5(7) of the …

**Ratio:** Section 5(7) of the IBC defines a 'financial creditor' as a person to whom a financial

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**Reasoning:** The Tribunal considered the respondent's argument that the debt was not legally assigned.

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**Interpretation:** The interpretation of Section 5(7) hinges on the validity of the assignment or

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**Application:** The Tribunal applied the definition of 'financial creditor' to the facts and

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## Parties

- **Judges:** R.P.Nag…; Pradeep R.…
- **Appellants:** Phoenix Arc…
- **Respondents:** M/s GPI Textiles…

## Timeline

- **2000-09-29 — Incorporation of GPI…**: GPI Textiles Limited…
- **2009-03-24 — Sanction Lette…**: HSBC granted working capital and term loan facilities to GPI Textiles vide sanction…

## 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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