# In the matter of Kumlai Tea and Industries Ltd. CP(IB)No. 306-KB-2019

> NCLT judgment dated 2019-08-01. Citation: TCN-2019-NCLT-02141. UCO Bank, the Financial Creditor, filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 1 Aug 2019
- **Citation:** TCN-2019-NCLT-02141
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kumlai-tea-and-industries-ltd-cpibno-306-kb-2019-0b406478

## Summary

### Background

UCO Bank, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s Kumlai Tea and Industries Ltd., the Corporate Debtor. The Corporate Debtor allegedly defaulted in paying a financial debt of Rs. 45,62,70,000/-. The Financial Creditor had granted and disbursed various terms loan, cash credit facilities, etc., to the Corporate Debtor, totaling Rs. 12,06,82,000/-. The Corporate Debtor was declared a Non-Performing Asset (NPA) on 31.01.2019.

## Facts

UCO Bank, a banking company, is the Financial Creditor. M/s Kumlai Tea and Industries Ltd. is the Corporate Debtor. UCO Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against Kumlai Tea, alleging a default of Rs. 45,62,70,000/-. UCO Bank had disbursed loans and credit facilities totaling Rs. 12,06,82,000/- to Kumlai Tea. Kumlai Tea was declared an NPA on 31.01.2019. The Corporate Debtor was served notice but did not file a reply. The Financial Creditor had initiated proceedings under the SARFAESI Act in 2010 and before the DRT. The Financial Creditor proposed Mr. Samya Sengupta as the Interim Resolution Professional (IRP).

## 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 found that the Financial Creditor had produced evidence establishing a

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

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**Application:** The court applied Section 7 to the facts of the case, finding that UCO Bank, as

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## Parties

- **Judges:** Madan B.…
- **Appellants:** UCO B…
- **Respondents:** M/s Kumlai Tea…

## Timeline

- **2019-01-31 — Declaration…**: The Corporate Debtor was declared…
- **2019-04-23 — Disbursement…**: The Financial Creditor granted and disbursed various terms loan, cash credit facilities…

## 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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