# In the matter of Gujarat Metallic Coal & Coke Ltd. C.P. (IB) No. 07-KB-2019

> NCLT judgment dated 2020-01-23. Citation: TCN-2020-NCLT-02197. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 23 Jan 2020
- **Citation:** TCN-2020-NCLT-02197
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/gujarat-metallic-coal-coke-ltd-cp-ib-no-07-kb-2019-6722f351

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by LVB RARC 038 TRUST, through its Sole Trustee Reliance Asset Reconstruction Company Limited, against M/s. Gujarat Metallic Coal & Coke Limited, the Corporate Debtor. The Financial Creditor seeks to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to unpaid debts. The Corporate Debtor had approached The Lakshmi Vilas Bank Limited for availing various credit facilities for the purpose of meeting its business requirements and the Corporate Debtor had executed several financing agreements and security agreements. The Corporate Debtor was declared a Non-Performing Asset on 9th January, 2014, by Lakshmi Vilas Bank Limited. Later,

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## Facts

LVB RARC 038 TRUST, through its Sole Trustee Reliance Asset Reconstruction Company Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Gujarat Metallic Coal & Coke Limited. The Corporate Debtor had availed credit facilities from Lakshmi Vilas Bank Limited and executed financing agreements. The Corporate Debtor was declared a Non-Performing Asset on 9th January, 2014. The loan was restructured on 13th December, 2014, to Rs. 50 Crores, but the Corporate Debtor failed to repay from June, 2015. Lakshmi Vilas Bank Limited assigned the loan accounts to Reliance Asset Reconstruction Company Limited on 31st March, 2017. The Corporate Debtor proposed a settlement on 7th June, 2017, which was accepted subject to further

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency & …

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

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**Reasoning:** The Financial Creditor has demonstrated that the Corporate Debtor defaulted on its

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** The Financial Creditor, having acquired the rights of the original lender, is

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** LVB RARC 03…
- **Respondents:** M/S. GUJARAT…

## Timeline

- **2014-01-09 — Corporate Debtor…**: The Corporate Debtor was declared a…
- **2014-12-13 — Loan Restructuring…**: Agreement executed to restructure 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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