# In the matter of Gurdaspur Overseas Ltd. CP (IB) No. 8-Chd-Pb-2019

> NCLT judgment dated 2019-09-05. Citation: TCN-2019-NCLT-01547. State Bank of India, a financial creditor, filed a petition under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 5 Sept 2019
- **Citation:** TCN-2019-NCLT-01547
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/gurdaspur-overseas-ltd-cp-ib-no-8-chd-pb-2019-522a6a5f

## Summary

### Background

State Bank of India, a financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the corporate insolvency resolution process (CIRP) against Gurdaspur Overseas Ltd., the corporate debtor, due to default in repayment of financial debt. The corporate debtor is registered under the Companies Act, 1956. The loan facilities were sanctioned on 31.01.2014 for ₹85 crores, with SBI's share being ₹25 crores. The facilities were enhanced to ₹130 crores on 07.05.2015. The corporate debtor faced losses in the rice industry and proposed restructuring, which was declined by the bank. The bank also initiated proceedings under the SARFAESI Act, 2002.

## Facts

State Bank of India (SBI), a financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Gurdaspur Overseas Ltd., the corporate debtor. SBI, having a branch in Ludhiana, extended loan facilities to the corporate debtor. The corporate debtor is a company registered under the Companies Act, 1956, on 18.09.2009, with an authorized share capital of ₹31,00,00,000/- and a paid-up capital of ₹29,68,73,500/-. The corporate debtor was sanctioned loan facilities by SBI and other consortium members on 31.01.2014, totaling ₹85 crores, with SBI's share being ₹25 crores in the form of Cash Credit Hypothecation. The credit facilities were primarily secured by hypothecation

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## Issues and analysis

### Issue 1: Whether the application filed by the financial creditor, State Bank of India, under Section 7 of …

**Ratio:** Under sub-section (1) of Section 7 of the Code, a financial creditor can file an

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**Reasoning:** The court found that the financial creditor had relied upon evidence of default,

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The court applied the provisions of Section 7 to the facts of the case and

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## Parties

- **Judges:** Ajay Kumar…; Pradeep R.…
- **Appellants:** State Bank of…
- **Respondents:** Gurdaspur…; M/s Gurdaspur…

## Timeline

- **2009-09-18 — Company Regis…**: Gurdaspur Overseas Ltd. registered…
- **2014-01-31 — Loan San…**: Loan facilities sanctioned to the Corporate Debtor by State Bank of India and other…

## 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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