# In the matter of Howrah Mills Co. Limited

> NCLT judgment dated 25 Jan 2024. Citation: TCN-2024-NCLT-02911. J.M. Financial Asset Reconstruction Company Limited (JMFARC), the Financial Creditor,…

- **Court:** NCLT
- **Order date:** 25 Jan 2024
- **Citation:** TCN-2024-NCLT-02911
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/howrah-mills-co-limited-8097db31

## Summary

### Background

J.M. Financial Asset Reconstruction Company Limited (JMFARC), the Financial Creditor, initiated a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Howrah Mills Company Limited, the Corporate Debtor, for Corporate Insolvency Resolution Process (CIRP). Subsequently, an agreement to assign financial assets was executed between JMFARC and Abhinandan Holdings on January 15, 2020. Following this assignment, JMFARC filed I.A. 123/KB/2020 to withdraw the Company Petition, with the understanding that it could be revived if Abhinandan Holdings Pvt. Ltd. defaulted.

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## Facts

J.M. Financial Asset Reconstruction Company Limited (JMFARC), the Financial Creditor, filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Howrah Mills Company Limited, the Corporate Debtor. This petition was filed due to an alleged default by Howrah Mills.

An agreement to assign the financial assets of Howrah Mills was executed on January 15, 2020, between JMFARC (Intending Assignor) and Abhinandan Holdings Private Limited (Intending Assignee). Following this agreement, JMFARC filed I.A. 123/KB/2020 to withdraw the Company Petition, with the condition that it could be revived if Abhinandan Holdings defaulted.

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## Issues and analysis

### Issue 1: Whether the Section 7 application for CIRP against Howrah Mills Company Limited is maintainable,…

**Ratio:** A Section 7 application for CIRP against a corporate debtor is not maintainable if the…

**Reasoning:** The court reasoned that the assignment agreement between JMFARC and Abhinandan Holdings…

**Interpretation:** The court interpreted the assignment agreement and the Civil Court's injunction…

**Application:** Given that the assignment agreement was still in force, the payments made by…

## Parties

- **Judges:** BIDISHA BA…; Balraj…
- **Advocates:** For the Financial…; Indradeep Basu,…; +8 more

## Timeline

- **January 15, 2020 — Assignment Ag…**: Agreement to assign financial assets of Howrah Mills executed between JMFARC and…
- **January 23, 2020 — Withdrawal of C…**: Adjudicating Authority allowed withdrawal of C.P. (IB) No. 4/KB/2019 with liberty to…

## 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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