# In the matter of Kapico Motors India Private Limited IBA-355-2020

> NCLT judgment dated 2021-01-28. Citation: TCN-2021-NCLT-03207. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 28 Jan 2021
- **Citation:** TCN-2021-NCLT-03207
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kapico-motors-india-private-limited-iba-355-2020-aa4708ef

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by M/s. Jash Bhandari Educational Trust (Financial Creditor) against M/s. Kapico Motors India Private Limited (Corporate Debtor) for initiating the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed a default of Rs.49,84,109/-, including principal and interest. The Corporate Debtor failed to repay the loan despite a legal notice and dishonored cheques. The Corporate Debtor did not appear before the Tribunal despite receiving notice.

## Facts

M/s. Jash Bhandari Educational Trust (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Kapico Motors India Private Limited (Corporate Debtor). The Financial Creditor claimed a sum of Rs.49,84,109/-, including a principal of Rs.37,50,000/- and interest at 21% p.a. amounting to Rs.12,34,109/-. The Corporate Debtor sought financial assistance of Rs.50,00,000/- from the Financial Creditor on 31.07.2018, promising repayment with interest. The Financial Creditor disbursed Rs.50,00,000/- to the Corporate Debtor's account. The Corporate Debtor executed a promissory note on 31.07.2018 for Rs.50,00,000/- repayable with 21% interest. The Corporate Debtor issued three post-dated cheques, but one cheque was returned

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## Issues and analysis

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

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

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**Reasoning:** The Tribunal noted that the Financial Creditor had disbursed the loan amount to the

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues by

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

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## Parties

- **Judges:** R. VARADH…; Anil Ku…
- **Appellants:** M/s. Jash…
- **Respondents:** M/s. Kapico…; M/s. Kapico…

## Timeline

- **2018-07-31 — Loan Req…**: Corporate Debtor sought financial assistance of Rs.50,00,000/- from the Financial…
- **2018-07-31 — Promissor…**: Corporate Debtor executed a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 138 — Discharge order](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-138)

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