# In the matter of Kumar Ashiyana Pvt. Ltd. CP No.(IB)190-ALD-2018

> NCLT judgment dated 2018-09-19. Citation: TCN-2018-NCLT-00736. M/s Dasaprakash Hotels and Resorts Pvt. Ltd. filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 19 Sept 2018
- **Citation:** TCN-2018-NCLT-00736
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kumar-ashiyana-pvt-ltd-cp-noib190-ald-2018-6d2396b2

## Summary

### Background

M/s Dasaprakash Hotels and Resorts Pvt. Ltd. filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against M/s Kumar Ashiyana Pvt. Ltd. The applicant, a financial creditor, had advanced a loan to the corporate debtor for renovating a hotel, which was to be operated on a revenue-sharing basis. A lease rent agreement was entered into on 2007-09-04. The corporate debtor also entered into a tripartite agreement with the State Bank of Patiala, where the applicant acted as a guarantor. The lease rent agreement was terminated on 2012-01-01. The applicant claimed that the amount advanced to the corporate debtor became due upon termination. A compromise agreement was entered into

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## Facts

M/s Dasaprakash Hotels and Resorts Pvt. Ltd. (the Applicant/Financial Creditor) is a company engaged in running hotels. M/s Kumar Ashiyana Pvt. Ltd. (the Corporate Debtor) approached the Applicant to operate its hotel on a revenue-sharing basis. On 2007-09-04, they entered into a lease rent agreement, where the Applicant advanced Rs. 54,00,000 to the Corporate Debtor for hotel renovation. The Applicant also advanced an additional Rs. 2,89,500, bringing the total loan to Rs. 56,89,500. The Corporate Debtor entered into a tripartite agreement with the State Bank of Patiala on 2008-01-30, with the Applicant as a guarantor for a Rs. 75,00,000 borrowing. The lease rent agreement was terminated on 2012-01-01, making the advanced amount due. The Applicant served a demand

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## Issues and analysis

### Issue 1: Whether the alleged breach of Compromise Agreement dated 2014-07-19 falls under the definition of …

**Ratio:** Section 5(8) of the Insolvency and Bankruptcy Code (IBC) defines 'financial debt' as a

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**Reasoning:** The court reasoned that the compromise agreement stipulated that the Corporate Debtor

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**Interpretation:** The interpretation of Section 5(8) focuses on whether the debt has a commercial

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**Application:** The court applied the definition of financial debt to the facts of the case,

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## Parties

- **Judges:** SH. V.P.…; Saroj Ra…
- **Appellants:** M/S DASAPRAKASH…
- **Respondents:** M/S KUMAR…

## Timeline

- **2007-09-04 — Lease Rent Ag…**: Applicant and Corporate Debtor entered into a lease rent agreement where Applicant…
- **2008-01-30 — Tripartite Ag…**: Corporate Debtor entered into a tripartite agreement with State Bank of Patiala, with…

## 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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