# In the matter of HBN Foods Limited (IB)-1359(ND)2019

> NCLT judgment dated 2019-10-21. Citation: TCN-2019-NCLT-00895. The case originates from a petition filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 21 Oct 2019
- **Citation:** TCN-2019-NCLT-00895
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/hbn-foods-limited-ib-1359nd2019-0f415c61

## Summary

### Background

The case originates from a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by 18 claimants, represented by Ashoksing L. Rajput, against HBN Foods Limited. The claimants, acting as financial creditors, initiated the Corporate Insolvency Resolution Process (CIRP) due to defaults on an investment scheme floated by HBN Foods Ltd. The company, incorporated in 2013, allegedly collected monies from the public with promises of assured returns, but its directors later absconded, leading to the closure of its office and the freezing of the applicants' investments. A related company, HBN Dairies & Allied Ltd., was already undergoing CIRP.

## Facts

Ashoksing L. Rajput and 17 other claimants filed a petition against HBN Foods Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. The claimants, acting as financial creditors, alleged that HBN Foods Limited defaulted on an investment scheme. HBN Foods Limited, incorporated on March 1, 2013, floated an investment scheme (Circular 9 dated August 1, 2013) promising assured returns. The directors of HBN Foods Limited absconded, leading to the closure of the company's office. The petitioners invested a total principal amount of Rs. 54,24,150, with a total claim of Rs. 74,31,447. The respondent company did not appear during the proceedings, leading the Tribunal to proceed ex-parte. The financial creditors established a default exceeding Rs. 1,00,000. A

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## Issues and analysis

### Issue 1: Whether the Financial Creditors have established a default on the part of the Corporate Debtor in …

**Ratio:** The legal principle applied is that if a corporate debtor defaults on its financial

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**Reasoning:** The court reasoned that the financial creditors presented sufficient evidence to

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**Interpretation:** The interpretation of the law is that the burden of proof lies on the financial

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**Application:** In this case, the financial creditors provided evidence of the investment

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## Parties

- **Judges:** Ina Mal…; SHRI. L. N.…
- **Appellants:** Ashoksing L…
- **Respondents:** HBN FOODS L…
- **Advocates:** Pankaj…; Priyaranjan…

## Timeline

- **2013-03-01 — Incorporation of HBN…**: HBN Foods Limited was incorporated under the…
- **2013-08-01 — Investment…**: HBN Foods LTD. floated an…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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