# In the matter of Kaneri Agro Industries Ltd. CP (IB) No. 699-7-NCLT-AHM-2019

> NCLT judgment dated 2020-10-07. Citation: TCN-2020-NCLT-00447. The case involves an application filed by Shree Ambica Rice Mill (Financial Creditor) under…

- **Court:** NCLT
- **Order date:** 7 Oct 2020
- **Citation:** TCN-2020-NCLT-00447
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kaneri-agro-industries-ltd-cp-ib-no-699-7-nclt-ahm-2019-055199bb

## Summary

### Background

The case involves an application filed by Shree Ambica Rice Mill (Financial Creditor) under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Kaneri Agro Industries Limited (Corporate Debtor). The Financial Creditor claimed that the Corporate Debtor defaulted on a debt of Rs. 10,50,000/-, with the date of default stated as September 30, 2019. The Corporate Debtor admitted to the debt in an affidavit-in-reply dated January 3, 2020. The Financial Creditor is a partnership firm engaged in Paddy Milling, boiling, trading & manufacturing of Rice and other agricultural produce. Transactions between the parties were often squared up quickly. The Corporate Debtor also obtained a cash credit

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## Facts

Shree Ambica Rice Mill, the Financial Creditor, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Kaneri Agro Industries Limited, the Corporate Debtor. The Financial Creditor claimed a default of Rs. 10,50,000/-, with the default date being September 30, 2019. The Corporate Debtor admitted the debt in an affidavit. The Financial Creditor is a partnership firm involved in rice milling and related activities. Transactions between the parties were often quickly settled. The Corporate Debtor had obtained a cash credit limit from Bank of Baroda in October 2018. The bank declared the Corporate Debtor's account as a Non-Performing Asset (NPA) on August 2, 2019, and

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor is a collusive application intended to seek …

**Ratio:** The principle of preventing abuse of the IBC process and ensuring genuine insolvency

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**Reasoning:** The court reasoned that the transactions between the Financial Creditor and the Corporate

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**Interpretation:** Section 14 of the IBC provides for a moratorium to protect the corporate debtor

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**Application:** The court applied this principle to the facts, noting the quick squaring up of

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Shree Ambica Rice…
- **Respondents:** M/s. Kaneri Agro…
- **Advocates:** Ketan M.…; Jaimin…

## Timeline

- **2018-10-01 — Loan Taken by Corporate…**: The Corporate Debtor took a…
- **2018-10-12 — Cash Credit Limit…**: Cash credit limit sanctioned on…

## 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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