# In the matter of Kumar Metallurgical Corporation Limited CP No 416-7-HDB-2018

> NCLT judgment dated 2018-11-28. Citation: TCN-2018-NCLT-00278. IFCI Limited, the financial creditor, filed a company petition against Kumar's Metallurgical…

- **Court:** NCLT
- **Order date:** 28 Nov 2018
- **Citation:** TCN-2018-NCLT-00278
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kumar-metallurgical-corporation-limited-cp-no-416-7-hdb-2018-6c5d6d13

## Summary

### Background

IFCI Limited, the financial creditor, filed a company petition against Kumar's Metallurgical Corporation Limited, the corporate debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The corporate debtor had approached the financial creditor for credit facilities to set up a sponge iron plant and implement a forward integration scheme. The financial creditor, along with other institutions, sanctioned credit facilities. The corporate debtor defaulted on repayment, leading to the filing of the petition. The corporate debtor acknowledged its debt in various communications but cited financial difficulties and closure of its factory. The financial creditor argued that the debt was within

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## Facts

IFCI Limited (Financial Creditor) filed a petition against Kumar's Metallurgical Corporation Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor approached IFCI for credit facilities to establish a 60,000 tpa capacity coal-based sponge iron plant and a 1.25 lakhs tpa long steel products manufacturing unit. IFCI sanctioned credit facilities aggregating Rs. 2397 Lakhs. The Corporate Debtor executed various loan agreements, including a First Rupee Loan Agreement dated 31.01.1991, agreeing to create a first charge on immovable property. Further rupee term loans were sanctioned on 01.07.1992, 03.06.1993, 30.10.1993 and 26.12.1995. The Corporate Debtor committed default, leading IFCI to file an OA before the Debt

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## Issues and analysis

### Issue 1: Whether the Petitioner/Financial Creditor has made out the case under IB Code, 2016 for the purpose …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The Adjudicating Authority considered the evidence presented by the Financial Creditor,

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**Interpretation:** The interpretation of Section 7 of the IBC, 2016, is that upon establishing a

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**Application:** In this case, the Financial Creditor presented sufficient evidence to establish

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## Parties

- **Judges:** K. Anantha…
- **Appellants:** IFCI Li…
- **Respondents:** Kumar's Metallurgi…

## Timeline

- **1991-01-31 — First Rupee Loan…**: The Respondent/Corporate Debtor…
- **1992-07-01 — Rupee Loan Ag…**: The Respondent/Corporate Debtor…

## 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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