# In the matter of Jashank Impex Private Limited C.P. (IB) 175-NCLT-AHM-2020

> NCLT judgment dated 2021-08-02. Citation: TCN-2021-NCLT-01518. Drip Capital Inc. filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 2 Aug 2021
- **Citation:** TCN-2021-NCLT-01518
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jashank-impex-private-limited-cp-ib-175-nclt-ahm-2020-70057b5f

## Summary

### Background

Drip Capital Inc. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Janshank Impex Private Limited, the Corporate Debtor, due to a default of USD 2,00,000. The Financial Creditor claimed that they paid this amount to the Corporate Debtor towards assignment of two invoices, based on a term sheet letter dated 24.07.2019 and a Full Recourse Purchase and Security Agreement dated 10.09.2019. The Financial Creditor asserted that the Corporate Debtor was liable to pay the Financial Debt along with accrued interest and charges if the buyers of the goods failed to pay on the invoice due dates.

## Facts

Drip Capital Inc., a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Janshank Impex Private Limited, the corporate debtor. The application was filed due to a default of USD 2,00,000. Drip Capital Inc. had paid this amount to Janshank Impex Private Limited towards the assignment of two invoices, based on a term sheet letter dated 24.07.2019 and a Full Recourse Purchase and Security Agreement dated 10.09.2019. According to the agreement, Janshank Impex Private Limited was liable to pay the financial debt along with accrued interest and charges if the buyers of the goods failed to pay Drip Capital Inc. on the respective invoice due dates. A default cum

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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 basic conditions of Section 7 of the IBC, 2016, require that there should be a debt

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**Reasoning:** The NCLT reasoned that the disbursement of USD 2,00,000 to the Corporate Debtor was

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**Interpretation:** Section 7 of the IBC, 2016, allows a financial creditor to initiate CIRP

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**Application:** In this case, the NCLT found that the conditions of Section 7 were met because

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Drip Capit…
- **Respondents:** Janshank Impex…; Jashank Impex Pvt…

## Timeline

- **2019-07-24 — Term Sheet…**: Term sheet letter executed between Drip Capital…
- **2019-09-10 — Full Recourse Purchase…**: Full Recourse Purchase and Security Agreement executed between Drip Capital Inc. and…

## 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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