# In the matter of Kaizen Power Limited CP(IB) No. 254-KB-2019

> NCLT judgment dated 2019-12-13. Citation: TCN-2019-NCLT-00180. Uco Bank, a financial creditor, filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 13 Dec 2019
- **Citation:** TCN-2019-NCLT-00180
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kaizen-power-limited-cpib-no-254-kb-2019-6c390ff3

## Summary

### Background

Uco Bank, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Kaizen Power Limited, the corporate debtor, due to a default of Rs. 170.20 Crore. The financial creditor had sanctioned term loans and foreign letters of credit with bank guarantee facilities to the corporate debtor, who subsequently defaulted on payments. The corporate debtor argued that the debt was barred by limitation and that the application was not maintainable.

## Facts

Uco Bank sanctioned term loans and foreign letters of credit with bank guarantee facilities to Kaizen Power Limited. The sanction letter was dated 2010-06-21. The credit facilities were availed after execution of various agreements on 2012-08-30, 2012-07-19, and 2012-12-31. Kaizen Power Limited defaulted in payment of interest and principal amount. The accounts were declared as NPA on 2014-11-05. A recall notice was issued on 2014-11-19 to require the Corporate Debtor and its guarantors to repay the entire loan. The amount of default claimed is Rs. 170.20 Crore. The financial creditor contended that the property had been mortgaged, and the limitation period as per the Limitation Act, 1963, was 12 years. The corporate debtor argued that the application was not signed by

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## Issues and analysis

### Issue 1: Whether the application under Section 7 …

**Ratio:** The Insolvency and Bankruptcy Code, 2016 is an economic legislation designed to resolve

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**Reasoning:** The NCLT considered the arguments from both sides and analyzed the relevant provisions of

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**Interpretation:** The IBC should be interpreted harmoniously and liberally to give effect to its

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**Application:** The NCLT held that the application was maintainable because the financial

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** UCO B…
- **Respondents:** Kaizen Power…

## Timeline

- **2010-06-21 — Sanction…**: Financial Creditor sanctioned Term Loans, Foreign letter of credit with bank guarantee…
- **2012-08-30 — Execution of A…**: Credit facilities were availed after…

## 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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