# In the matter of Kitply Industries Ltd. C. P. No. (IB)-02-GB-2018

> NCLT judgment dated 2018-05-01. Citation: TCN-2018-NCLT-01471. IDBI Bank Limited, the Financial Creditor (FC), filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 1 May 2018
- **Citation:** TCN-2018-NCLT-01471
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kitply-industries-ltd-c-p-no-ib-02-gb-2018-e99d88b7

## Summary

### Background

IDBI Bank Limited, the Financial Creditor (FC), filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC) against Kitply Industries Limited, the Corporate Debtor (CD), seeking initiation of Corporate Insolvency Resolution Process (CIRP). The FC had granted a loan of Rs. 500 lakhs to the CD in 1994. The CD defaulted on repayment, leading to a one-time settlement (OTS) in 2008. Under the OTS, the CD was to pay Rs. 77.56 crores, partly in cash and partly through 6% Cumulative Non-Convertible Debentures. The CD again slipped into financial difficulties and approached the authority concerned to be declared a sick industry under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The FC issued a letter to the CD requesting

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## Facts

In 1994, IDBI Bank Limited (Financial Creditor or FC) granted a loan of Rs. 500 lakhs to Kitply Industries Limited (Corporate Debtor or CD). The CD defaulted on the loan repayment, leading to a one-time settlement (OTS) in 2008. As part of the OTS, the CD was to pay Rs. 77.56 crores, including Rs. 46.10 crores in cash and Rs. 31.55 crores through 6% Cumulative Non-Convertible Debentures. The CD made some payments but again faced financial difficulties and approached authorities to be declared a sick industry under SICA 1985. The FC requested the CD to repay the loan with interest, but the CD claimed it had no liability due to a 'No Dues Certificate'. The CD also made a reference to BIFR in 2012, which remained pending. As of 31.10.2017, the CD owed the FC Rs.

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is maintainable …

**Ratio:** The authority to file an application under Section 7 of the IBC can be derived from board

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**Reasoning:** The NCLT scrutinized the board resolutions presented by the FC and found that they

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**Interpretation:** The IBC allows for a flexible approach to authorization, recognizing that

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**Application:** In this case, the NCLT found that the board resolutions authorized the GM to

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## Parties

- **Judges:** P. K. S…
- **Respondents:** Kitply Industries…

## Timeline

- **1994-01-01 — Loan Gra…**: IDBI Bank Limited granted a loan of Rs.…
- **2008-01-01 — One-Time Settlement…**: A one-time settlement (OTS) was arrived at between IDBI Bank Limited and Kitply…

## Legal provisions

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

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