# In the matter of Karuna Distributors Private Limited C.P.(IB) No. 1432-KB-2019

> NCLT judgment dated 2021-11-03. Citation: TCN-2021-NCLT-00593. The case involves an application filed by Agarwal Polysacks Limited under Section 7 of the…

- **Court:** NCLT
- **Order date:** 3 Nov 2021
- **Citation:** TCN-2021-NCLT-00593
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/karuna-distributors-private-limited-cpib-no-1432-kb-2019-cc8ce269

## Summary

### Background

The case involves an application filed by Agarwal Polysacks Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Karuna Distributors Private Limited. Agarwal Polysacks Limited claims to be a financial creditor to whom Karuna Distributors Private Limited owes a debt. The application was filed due to the alleged default in repayment of the loan amount along with interest.

## Facts

Agarwal Polysacks Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Karuna Distributors Private Limited, the Corporate Debtor. The Financial Creditor claimed that the Corporate Debtor owed a sum of Rs. 1,73,69,830/- which included principal and interest till 31st July 2019. The principal loan amount was Rs. 1,67,00,000/-. The loan was granted in several tranches from 12th July 2017 to 30th March 2019, with an interest rate of 12% per annum. The date of default was stated as 17th June 2019. The Financial Creditor submitted bank statements, email confirmations from the Corporate Debtor acknowledging the debt, and TDS deductions as evidence.

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## Issues and analysis

### Issue 1: Whether the debt claimed by Agarwal Polysacks Limited qualifies as a 'financial debt' under Section …

**Ratio:** A 'financial debt' is defined under Section 5(8) of the IBC as a debt along with

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**Reasoning:** The Adjudicating Authority considered the evidence presented by the Financial Creditor,

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**Interpretation:** The interpretation of Section 5(8) requires that the debt must be disbursed

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**Application:** In this case, the Adjudicating Authority found that the money was disbursed as

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## Parties

- **Judges:** RohitKa…; Harish Chander…
- **Appellants:** Agarwal Polysacks…
- **Respondents:** Karuna Distributor…

## Timeline

- **2017-07-12 — Loan Gra…**: Unsecured loan of Rs.2,42,00,000/- granted to the Corporate Debtor in several tranches…
- **2019-03-30 — Loan Gra…**: Unsecured loan of Rs.2,42,00,000/- granted to the Corporate Debtor in several tranches…

## 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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