# In the matter Gandhamardhan Sponge Industries Private Limited CP (IB) No. 180-KB-2019

> NCLT judgment dated 2019-10-04. Citation: TCN-2019-NCLT-01084. An application was filed by the Financial Creditor, ATO(I) Limited, under Section 7(1) of the…

- **Court:** NCLT
- **Order date:** 4 Oct 2019
- **Citation:** TCN-2019-NCLT-01084
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/in-the-matter-gandhamardhan-sponge-industries-private-limited-cp-ib-no-180-kb-20-0328f2f8

## Summary

### Background

An application was filed by the Financial Creditor, ATO(I) Limited, under Section 7(1) of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Gandhamardhan Sponge Industries Private Limited, the Corporate Debtor, due to a default in paying a financial debt.

## Facts

ATO(I) Limited, the Financial Creditor, filed an application under section 7(1) of the Insolvency and Bankruptcy Code, 2016 to initiate the Corporate Insolvency Resolution Process (CIRP) against Gandhamardhan Sponge Industries Private Limited, the Corporate Debtor. The application was filed because the Corporate Debtor defaulted on a financial debt amounting to Rs. 99,41,096/-. The facts of the case, including the loan amount and default, were not disputed by the parties involved. On August 11, 2015, the Financial Creditor lent Rs. 75,00,058/- to the Corporate Debtor as a loan, disbursed via cheque. The loan was to be repaid within 60 days. The Corporate Debtor made interest payments as per the agreed rate, with the last payment on August 25, 2018. Subsequently, the

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority became functus officio to adjudicate the application due to not …

**Ratio:** The Adjudicating Authority does not become functus officio if the application is not

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**Reasoning:** The delay in disposing of the application within 14 days was caused by the Corporate

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**Interpretation:** The court interpreted Section 7(4) of the IBC as directory, meaning that while

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**Application:** Since the Corporate Debtor caused the delay by seeking time, they cannot

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** ATO (I) L…
- **Respondents:** Gandhamardhan…
- **Advocates:** Siddhartha…; Abhijit…; +6 more

## Timeline

- **August 11, 2015 — Loan Disb…**: Financial Creditor lent Rs. 75,00,058/- to the Corporate Debtor as a loan, disbursed by…
- **August 25, 2018 — Last Interest…**: Corporate Debtor made its last…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7(1) — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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