# In the matter of Kingston Paptech Pvt. Ltd. CP (IB) No. 543-7-NCLT-AHM-2018

> NCLT judgment dated 2021-03-15. Citation: TCN-2021-NCLT-02702. The application was filed by Krishna Paper Trading Co. (Financial Creditor) under Section 7 of…

- **Court:** NCLT
- **Order date:** 15 Mar 2021
- **Citation:** TCN-2021-NCLT-02702
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kingston-paptech-pvt-ltd-cp-ib-no-543-7-nclt-ahm-2018-efe93cbd

## Summary

### Background

The application was filed by Krishna Paper Trading Co. (Financial Creditor) under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Kingston Paptech Pvt. Ltd. (Corporate Debtor). The Financial Creditor claimed that the Corporate Debtor defaulted in paying a financial debt of Rs. 37,10,972/-. The date of default was stated as 14-07-2015. The Financial Creditor stated that it had given a loan of Rs. 52,50,000/- to the Corporate Debtor, payable on demand. The Corporate Debtor had paid Rs. 30,00,000/-, leaving a balance of Rs. 22,50,000/- plus interest unpaid.

## Facts

Krishna Paper Trading Co. (Financial Creditor), a proprietary concern, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Kingston Paptech Pvt. Ltd. (Corporate Debtor). The Financial Creditor claimed that it had given a loan of Rs. 52,50,000/- to the Corporate Debtor, payable on demand. The Corporate Debtor paid Rs. 30,00,000/-, but defaulted on the remaining Rs. 22,50,000/- plus interest. The total default amount was Rs. 37,10,972/-, with the date of default being 14-07-2015. The Corporate Debtor raised technical defenses, arguing that a proprietary firm cannot file an application under the IBC and that the Information Utility (IU) certificate was not produced. The NCLT

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## Issues and analysis

### Issue 1: Whether a proprietary firm can file an application under Section 7 of the Insolvency & …

**Ratio:** A proprietary concern, being a creditor, can initiate Corporate Insolvency Resolution

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**Reasoning:** The Hon'ble NCLAT in the case of Neeta Saha v. Ram Niwas Gupta 191(IBC)156/2020 has held

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**Interpretation:** This clarifies that the legal standing of a proprietary firm is sufficient to

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**Application:** The NCLT applied this ratio to the present case, dismissing the Corporate

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Krishna Paper…
- **Respondents:** Kingston Paptech…
- **Advocates:** Vaibhav V G…; Nitin Y D…

## Timeline

- **2015-07-14 — Date of D…**: The Corporate Debtor defaulted in paying…
- **2021-03-03 — Order Res…**: The order was reserved…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14(1) — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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