# In the matter of Jay Bharat Fabrics Mills Limited CP (IB) No. 353-NCLT-AHM-2020

> NCLT judgment dated 2021-09-13. Citation: TCN-2021-NCLT-01129. The case involves an application filed by the Financial Creditor, Ravinder Kumar Agarwal,…

- **Court:** NCLT
- **Order date:** 13 Sept 2021
- **Citation:** TCN-2021-NCLT-01129
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jay-bharat-fabrics-mills-limited-cp-ib-no-353-nclt-ahm-2020-6ff07251

## Summary

### Background

The case involves an application filed by the Financial Creditor, Ravinder Kumar Agarwal, against the Corporate Debtor, Jay Bharat Fabrics Mills Limited, under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiation of the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed a default of Rs. 5,00,000/- with @12% p.a. interest, with the default date being 01.01.2020. The Financial Creditor gave a loan of Rs. 5,00,000/- on 12.03.2019 as per MOU dated 12.03.2019 to the Corporate Debtor. The Corporate Debtor failed to repay the loan on the due date, 31.12.2020. The Financial Creditor issued a Demand Notice on 17.01.2020, giving three days to repay the loan, which was not complied with by the Corporate Debtor.

## Facts

Ravinder Kumar Agarwal, proprietor of Santosh Fashion, is the Financial Creditor who filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Jay Bharat Fabrics Mills Limited, the Corporate Debtor. The Financial Creditor claimed that the Corporate Debtor defaulted on a loan of Rs. 5,00,000/- given on 12.03.2019 as per a Memorandum of Understanding (MOU). The default date was 01.01.2020, with interest at 12% p.a. The Corporate Debtor failed to repay the loan by the due date of 31.12.2020. The Financial Creditor issued a demand notice on 17.01.2020, giving three days to repay the loan, but the Corporate Debtor did not comply. The Corporate Debtor's counsel cited liquidity crunch and adverse business circumstances as reasons for

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The court considered the submissions made by both parties and the material available on

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The court found that the Financial Creditor had provided sufficient evidence of

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Ravinder Kumar…
- **Respondents:** Jay Bharat…; Jay Bharat…

## Timeline

- **2019-03-12 — Loan Agre…**: Financial Creditor gave a loan of Rs.…
- **2020-01-01 — Default…**: Default date for the…

## 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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