# In the matter of J.L. Knit (India) Limited IB-1075- (ND)-2018

> NCLT judgment dated 2019-08-08. Citation: TCN-2019-NCLT-02029. The case involves an application filed by Stressed Assets Stabilization Fund ('Applicant')…

- **Court:** NCLT
- **Order date:** 8 Aug 2019
- **Citation:** TCN-2019-NCLT-02029
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jl-knit-india-limited-ib-1075-nd-2018-89270ece

## Summary

### Background

The case involves an application filed by Stressed Assets Stabilization Fund ('Applicant') under Section 7 of the Insolvency and Bankruptcy Code 2016 ('the Code') to initiate corporate insolvency resolution process ('CIRP') against J.L. Knit (India) Limited ('Respondent'). The application is based on the Respondent's failure to settle an amount of Rs. 262,72,34,005/-, including interest, towards financial credit given by the Applicant. The Corporate Debtor had approached IDBI for financial assistance in 1995, which was agreed upon in principle. Subsequent loan agreements were executed, including foreign currency loans and rupee term loans. The Corporate Debtor defaulted on various loan agreements, leading to the transfer of the facilities to Stressed Assets

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## Facts

In 1995, J.L. Knit (India) Limited ('Corporate Debtor') sought financial assistance from IDBI, which was initially agreed upon. A foreign currency loan agreement was executed on November 9, 1995, but the loan was not disbursed. In 1996, the Corporate Debtor requested changes to the project, which IDBI accepted within the initially sanctioned amount. On June 25, 1996, the initial loan agreement was superseded by a new agreement. A third loan agreement for Rs. 108 Lakhs was executed on March 7, 1997. In 2000, the Corporate Debtor requested a conversion of foreign currency loans into a single currency pool, which was agreed upon. The Corporate Debtor defaulted on the loans, with the first default occurring on July 1, 2006, for the foreign currency loan, January 1, 2005,

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## Issues and analysis

### Issue 1: Whether the application filed by Stressed Assets Stabilization Fund under Section 7 of the …

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

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**Reasoning:** The court found that the Applicant had provided sufficient documents to prove that there

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

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**Application:** The court applied Section 7 to the facts of the case, finding that the

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## Parties

- **Judges:** R. VARADH…; K.K. V…
- **Appellants:** Stressed Assets…
- **Respondents:** J.L. KNIT (India)…
- **Advocates:** Vaibhav M…; Sugam…; +1 more

## Timeline

- **1995-01-01 — Corporate Debtor…**: The Corporate Debtor approached…
- **1995-08-23 — IDBI agreed in…**: IDBI agreed in principle to grant Foreign Currency Loans equivalent to Indian Rs. 580…

## 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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