# In the matter of Hotline CPT Limited IB-33- (ND)-2019

> NCLT judgment dated 2019-08-27. Citation: TCN-2019-NCLT-01736. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 27 Aug 2019
- **Citation:** TCN-2019-NCLT-01736
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/hotline-cpt-limited-ib-33-nd-2019-006af69b

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by M/S Stressed Asset Stabilization Fund (SASF) against M/S Hotline CPT Ltd., claiming to be a financial creditor of the respondent company, termed as the corporate debtor. In 1995, IDBI sanctioned financial assistance to Hotline CPT Limited for setting up a plant. Subsequent events included loan cum security documents, mortgage creation, transfer of assets and liabilities to LG Hotline CPT Ltd., and financial restructuring. In 2004, IDBI assigned the financial assistance to SASF. In 2007, the corporate debtor filed an application under the Sick Industrial Companies Act, 1985, which was admitted. Despite financial facilities, the corporate debtor was irregular in

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## Facts

In 1995, IDBI sanctioned financial assistance to Hotline CPT Limited for setting up a plant in Madhya Pradesh. Loan cum security documents were executed in July and October 1995. In 1998, assets and liabilities were transferred to LG Hotline CPT Ltd. In 1999, IDBI agreed to financial restructuring and proposed converting a foreign currency loan. In 2004, IDBI assigned the financial assistance to Stressed Assets Stabilization Fund (SASF). In 2007, the corporate debtor filed an application under the Sick Industrial Companies Act, 1985, which was admitted. In 2018, SASF recalled the financial facilities due to irregular payments. SASF initiated recovery proceedings before the Debt Recovery Tribunal. The corporate debtor filed a settlement proposal which was later

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, should be …

**Ratio:** The Insolvency and Bankruptcy Code, 2016, allows for the initiation of CIRP upon default

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**Reasoning:** The Tribunal considered the documents and arguments presented by both parties. It noted

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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 Tribunal found that the corporate debtor had defaulted on its debt, and the

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## Parties

- **Judges:** R. VARADH…
- **Appellants:** M/S Stressed…
- **Respondents:** M/S Hotline CPT…
- **Advocates:** Anju B…; Apoorva G…; +3 more

## Timeline

- **1995-01-01 — Financial Assistance…**: IDBI sanctioned financial…
- **1995-07-13 — Loan Cum Security…**: Loan cum security…

## 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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