# In the matter of Growthways Trading Private Limited IB-1443-(ND)-2019

> NCLT judgment dated 2019-12-17. Citation: TCN-2019-NCLT-00120. Elite Steels Private Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 17 Dec 2019
- **Citation:** TCN-2019-NCLT-00120
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/growthways-trading-private-limited-ib-1443-nd-2019-24f96fd0

## Summary

### Background

Elite Steels Private Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, against Growthways Trading Private Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The application was based on a financial debt arising from a Rent Cum charge Agreement entered into between the parties.

## Facts

Elite Steels Private Limited (Financial Creditor) filed an application under Section 7 of the IBC against Growthways Trading Private Limited (Corporate Debtor) for initiating CIRP. A Rent Cum charge Agreement was entered into on 2017-04-01, where the Financial Creditor made a security deposit of Rs. 4,50,00,000/- towards the inventory of the Corporate Debtor. The Corporate Debtor received Rs. 3,00,00,000/- on signing, with the balance to be adjusted from rent. The security deposit carried an interest of 17% per annum. An addendum was made on 2018-04-01, terminating the rent provisions and increasing the security deposit from Rs. 3,00,00,000/- to Rs. 3,75,00,000/-, increasing the total charge to Rs. 7,50,00,000/-. The Financial Creditor fulfilled its obligations, but

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the IBC, 2016, for …

**Ratio:** Section 7 of the IBC, 2016, allows a financial creditor to initiate CIRP against a

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**Reasoning:** The court considered the provisions of Section 7 of the IBC, 2016, and the rules framed

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**Interpretation:** Section 7 of the IBC, 2016, provides a mechanism for financial creditors to

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**Application:** The Financial Creditor filed the application under Section 7 of the IBC, 2016,

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## Parties

- **Judges:** Ch. Mohd Sharief…; K.K. V…
- **Appellants:** Elite Steels…
- **Respondents:** Growthways…

## Timeline

- **2017-04-01 — Rent Cum Charge…**: Rent Cum charge Agreement was entered into between Elite Steels Private Limited and…
- **2018-04-01 — Addendum to A…**: An addendum to the Rent Cum charge Agreement was made, terminating the rent provisions…

## 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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