# In the matter of Jharkhand Mega Food Park Pvt. Ltd. CP (IB) No. 1231-KB-2019

> NCLT judgment dated 2020-01-10. Citation: TCN-2020-NCLT-02375. Allahabad Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 10 Jan 2020
- **Citation:** TCN-2020-NCLT-02375
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jharkhand-mega-food-park-pvt-ltd-cp-ib-no-1231-kb-2019-0846ab78

## Summary

### Background

Allahabad Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Jharkhand Mega Food Park Pvt. Ltd. The application was based on the Corporate Debtor's alleged default in paying its financial debt amounting to Rs. 46,25,83,785/-. The Financial Creditor had granted term loan and cash credit facilities to the Corporate Debtor, which were secured by demand promissory notes and equitable mortgage over the Corporate Debtor's properties. The Corporate Debtor failed to operate the loan accounts as per the terms of sanction, leading to the accounts becoming irregular and ultimately classified as a non-performing asset (NPA) on September 1, 2017. The Financial Creditor

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## Facts

Allahabad Bank, the Financial Creditor, sought to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Jharkhand Mega Food Park Pvt. Ltd., the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016. The basis for the application was the Corporate Debtor's default in paying its financial debt of Rs. 46,25,83,785/-. The Financial Creditor had granted term loan and cash credit facilities to the Corporate Debtor, initially for Rs. 33.95 Crores on May 10, 2012, secured by demand promissory notes and other documents executed on July 27, 2012. Further credit facilities were sanctioned, and the Corporate Debtor created an equitable mortgage over its properties. A term loan of Rs. 12.50 lakhs was sanctioned on January 16, 2016. The

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## Issues and analysis

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

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

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had defaulted in paying its

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

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**Application:** The Adjudicating Authority applied Section 7 to the facts of the case and found

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## Parties

- **Judges:** Madan B.…; Harish Chander…
- **Respondents:** M/s Jharkhand…
- **Advocates:** Ramesh Ch.…; M. Gh…

## Timeline

- **2012-05-10 — Initial Loan…**: Financial Creditor granted term loan and cash credit facilities to the Corporate Debtor…
- **2012-07-27 — Execution of D…**: Corporate Debtor executed demand…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(12) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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