# In the  matter of K.K Gifts Pvt. Ltd. C.P. (IB) No. 139-KB-2019

> NCLT judgment dated 2019-09-06. Citation: TCN-2019-NCLT-01540. Union Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 6 Sept 2019
- **Citation:** TCN-2019-NCLT-01540
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kk-gifts-pvt-ltd-cp-ib-no-139-kb-2019-639fee73

## Summary

### Background

Union Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against K.K. Gifts Private Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The Financial Creditor had sanctioned a cash credit limit to the Corporate Debtor, which the Corporate Debtor defaulted on repayment. The Financial Creditor classified the account as a Non-Performing Asset (NPA) and issued a recall notice. The Corporate Debtor argued that the Bank did not disburse the amount in terms of the sanction letter, hindering their ability to utilize the funds effectively.

## Facts

Union Bank of India sanctioned a cash credit limit of Rs.4,00,00,000/- to K.K. Gifts Private Limited at an interest rate of 13.25% per annum. This was documented in a sanction letter dated March 27, 2014, and later renewed. The credit limit was initially Rs.2,85,00,000/- with State Bank of India, Bhowanipore Branch, Kolkata, before being taken over. The Corporate Debtor defaulted on repayment, leading to the account being classified as a Non-Performing Asset (NPA) on January 30, 2016. A recall notice was issued on February 5, 2016, demanding Rs.4,11,04,970.15. The Financial Creditor had secured the loan with various documents, including hypothecation of stock and book debts, collateral securities, and personal guarantees. The Financial Creditor also presented

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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 Adjudicating Authority found that the Financial Creditor had complied with all the

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

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**Application:** In this case, the Financial Creditor provided evidence of the sanctioned loan,

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** Union Bank of…
- **Respondents:** K.K. Gifts…; M/S. K.K. GIFTS…

## Timeline

- **2014-03-27 — Sanction…**: Union Bank of India sanctioned cash credit limit of Rs.4,00,00,000/- to K.K. Gifts…
- **2014-11-07 — Enhanced Cred…**: Release of enhanced…

## 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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