# In the matter of Kilburn Chemicals Limited C.P. (IB) No. 764-KB-2020

> NCLT judgment dated 2020-08-10. Citation: TCN-2020-NCLT-00875. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 10 Aug 2020
- **Citation:** TCN-2020-NCLT-00875
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kilburn-chemicals-limited-cp-ib-no-764-kb-2020-660a5169

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Bank of Baroda and State Bank of India, as financial creditors, against M/s. Kilburn Chemicals Limited, the corporate debtor. The application seeks initiation of the Corporate Insolvency Resolution Process (CIRP) due to a default in payment. The corporate debtor acknowledged the debt but raised concerns regarding the calculation of interest and penal charges. The financial creditors claimed that the corporate debtor's account was declared a Non-Performing Asset (NPA) due to breach of terms and conditions of loan agreements. The application was filed before the declaration of lockdown.

## Facts

Bank of Baroda and State Bank of India, acting as financial creditors, jointly filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Kilburn Chemicals Limited, the corporate debtor. The corporate debtor defaulted on payments totaling Rs. 208,89,62,561.80 as of 04/06/2020. The financial creditors had sanctioned credit facilities to the corporate debtor, including term loans and working capital, under a consortium banking arrangement. The corporate debtor's account was declared a Non-Performing Asset (NPA) by both banks in December 2018. The corporate debtor acknowledged the debt but disputed the calculation of interest and penal charges. The application was filed

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditors 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 court considered the documents submitted by the financial creditors, including loan

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

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**Application:** The court found that the financial creditors had demonstrated the existence of

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## Parties

- **Judges:** Jinan…
- **Appellants:** Bank of B…
- **Respondents:** M/s. Kilburn…

## Timeline

- **2015-09-19 — Sanction of Credit…**: Applicant No. 1 (Bank of Baroda) sanctioned…
- **2016-01-04 — Sanction of Credit Facilities by State Bank of…**: Applicant No. 2 (State Bank of India) sanctioned credit facilities to the Corporate…

## 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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