# In the matter of Kimaya Industries Private Limited CP (IB) 13-7-NCLT-AHM-2020

> NCLT judgment dated 2021-03-01. Citation: TCN-2021-NCLT-02897. The case involves an application filed by Indiabulls Consumer Finance Limited (Financial…

- **Court:** NCLT
- **Order date:** 1 Mar 2021
- **Citation:** TCN-2021-NCLT-02897
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kimaya-industries-private-limited-cp-ib-13-7-nclt-ahm-2020-08e6d441

## Summary

### Background

The case involves an application filed by Indiabulls Consumer Finance Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Kimaya Industries Private Limited (Corporate Debtor) due to a default of Rs. 45,64,151/- and interest. The financial creditor, an NBFC, had provided a term loan of Rs. 50,00,000/- to the corporate debtor, which was to be repaid in 36 installments. The corporate debtor defaulted on payments, leading to arbitration proceedings and an ex-parte award in favor of the financial creditor. The financial creditor then filed the present application to initiate CIRP.

## Facts

Indiabulls Consumer Finance Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Kimaya Industries Private Limited (Corporate Debtor). The Corporate Debtor defaulted on a term loan of Rs. 50,00,000/- provided by the Financial Creditor, with the default amount totaling Rs. 45,64,151/- plus interest. The first default occurred on 05.08.2018, and the last default occurred on 05.10.2019. The Financial Creditor initiated arbitration proceedings, resulting in an ex-parte award in their favor on 05.04.2019, due to the Corporate Debtor's non-appearance. The Corporate Debtor argued that the Financial Creditor did not provide a certificate from the Reserve

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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 court noted that the corporate debtor had defaulted on the loan, and the financial

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

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**Application:** The court applied Section 7 to the facts of the case, noting that the corporate

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Indiabulls…
- **Respondents:** Kimaya Industries…; Kimaya Industries…

## Timeline

- **2017-12-06 — Loan Agre…**: Loan agreement between Indiabulls Consumer Finance Limited and Kimaya Industries Private…
- **2018-05-08 — First De…**: The corporate debtor made the first…

## 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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