# In the matter of Kothari Industrial Corporation Ltd CP-649-IB-2017

> NCLT judgment dated 2017-12-19. Citation: TCN-2017-NCLT-00027. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 19 Dec 2017
- **Citation:** TCN-2017-NCLT-00027
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kothari-industrial-corporation-ltd-cp-649-ib-2017-50ddd5ec

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Mr. A. Pandian (Financial Creditor) against Kothari Industrial Corporation Limited (Corporate Debtor) for initiating the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed that the Corporate Debtor had approached them for short-term advances for trading in rock and phosphate, and based on assurances, the Financial Creditor advanced money between 2013 and 2014.

## Facts

Mr. A. Pandian, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Kothari Industrial Corporation Limited, the Corporate Debtor. The Financial Creditor claimed to have advanced money to the Corporate Debtor for short-term trading in rock and phosphate between January 4, 2013, and June 19, 2014. The total disbursed amount was Rs. 1,25,00,000, out of which the Corporate Debtor made payments totaling Rs. 97,00,000. As of June 10, 2013, the balance due was Rs. 28,00,000. By December 31, 2014, after calculating interest at 18% per annum, the total amount due became Rs. 49,20,305, which further increased to Rs. 66,67,271 including additional interest. The Financial Creditor referred to a loan amount statement

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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 perused the application and the documents submitted by the Financial Creditor,

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The court found that the Financial Creditor had submitted sufficient evidence

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## Parties

- **Judges:** Ch. Mohd Sharief…
- **Appellants:** A. Pan…
- **Respondents:** Kothari Industrial…; Kothari Industrial…

## Timeline

- **2013-01-04 — Loan Advance…**: The Financial Creditor started advancing money to the Corporate Debtor for trading in…
- **2014-06-19 — Loan Advanc…**: The Financial Creditor stopped…

## 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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