# In the matter of K. K. Kadri Paper Mills Pvt. Ltd. C.P. (IB) No. 407-7-NCLT-AHM-2018

> NCLT judgment dated 2019-07-25. Citation: TCN-2019-NCLT-02309. The case involves an I.B. Petition filed by Edelweiss Asset Reconstruction Co. Ltd. (Financial…

- **Court:** NCLT
- **Order date:** 25 Jul 2019
- **Citation:** TCN-2019-NCLT-02309
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/k-k-kadri-paper-mills-pvt-ltd-cp-ib-no-407-7-nclt-ahm-2018-ae453a1d

## Summary

### Background

The case involves an I.B. Petition filed by Edelweiss Asset Reconstruction Co. Ltd. (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against K.K. Kadri Paper Mills Pvt. Ltd. (Corporate Debtor). The Financial Creditor is acting as a trustee of EARC Trust, SC 31. The Corporate Debtor had availed credit facilities from Bank of Baroda, which were later assigned to Edelweiss. Despite reminders, the Corporate Debtor failed to make payments, leading to the issuance of demand notices. The Corporate Debtor acknowledged its debt and proposed a settlement, but defaulted on the settlement amount. The Corporate Debtor opposed the CIRP, citing financial difficulties and ongoing

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## Facts

Edelweiss Asset Reconstruction Co. Ltd., acting as a Financial Creditor and trustee of EARC Trust SC 31, filed an I.B. Petition against K.K. Kadri Paper Mills Pvt. Ltd., the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor had obtained credit facilities from Bank of Baroda, amounting to Rs. 14.80 Crores in 2011, which were renewed/enhanced in 2012. These facilities included Cash Credit, Letter of Credit, and Term Loans. The Corporate Debtor executed Hypothecation Agreements, Guarantee Agreements, and Instruments related to the deposit of Title Deeds. The Corporate Debtor failed to make payments despite reminders, leading to a total outstanding amount of Rs. 22,93,84,430/- as of 2012. Bank of Baroda issued a demand

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## Issues and analysis

### Issue 1: Whether the present I.B. Petition 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 Corporate Debtor admitted its loan liability and defaulted on the settlement amount.

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**Interpretation:** Section 7 of the IBC provides a mechanism for financial creditors to initiate

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**Application:** The Corporate Debtor admitted its loan liability and defaulted on the

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## Parties

- **Judges:** Harihar Prakash…; Manorama…
- **Appellants:** Edelweiss Asset…
- **Respondents:** K.K. Kadri Paper…

## Timeline

- **2005-06-08 — Incorporation of…**: K.K. Kadri Paper Mills Pvt. Ltd. was…
- **2011-01-06 — Sanction…**: Bank of Baroda sanctioned credit facilities amounting to Rs.14.80 Crores to the…

## 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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