# In the matter of Kwality Ltd. (IB)-1440-(ND)-2018

> NCLT judgment dated 2018-12-11. Citation: TCN-2018-NCLT-00113. M/s. K.K.R. India Financial Services Pvt. Ltd., the Operational Creditor, filed a petition…

- **Court:** NCLT
- **Order date:** 11 Dec 2018
- **Citation:** TCN-2018-NCLT-00113
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kwality-ltd-ib-1440-nd-2018-3b22c47c

## Summary

### Background

M/s. K.K.R. India Financial Services Pvt. Ltd., the Operational Creditor, filed a petition under Section 7 of the IBC, 2016 against M/s. Kwality Ltd., the Corporate Debtor, seeking initiation of the Corporate Resolution Process due to the Corporate Debtor's inability to liquidate outstanding dues. The Financial Creditor had granted financial assistance to the Corporate Debtor, and a Facility Agreement dated June 24, 2016, was executed for procuring a loan of Rs. 2 Crores, which was disbursed in installments.

## Facts

M/s. K.K.R. India Financial Services Pvt. Ltd. (Financial Creditor) filed a petition against M/s. Kwality Ltd. (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The Financial Creditor had provided financial assistance to the Corporate Debtor, formalized through a Facility Agreement dated June 24, 2016, for a loan of Rs. 2 Crores. The loan was disbursed in multiple tranches between June 2016 and October 2016, totaling Rs. 2,000,000,000/-. The Corporate Debtor defaulted on the repayment schedule, leading to an outstanding liability of Rs. 32,73,47,082/-, inclusive of delayed and penal interest, as of October 9, 2018. The Corporate Debtor admitted to the default but stated that a consortium of banks was considering restructuring the

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## Issues and analysis

### Issue 1: Whether the petition filed by the Financial Creditor under Section 7 of the IBC, 2016, merits …

**Ratio:** Section 7 of the IBC, 2016 allows a financial creditor to initiate CIRP against a

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**Reasoning:** The court considered the averments made by the Financial Creditor, the admission of

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

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**Application:** The court applied the provisions of Section 7 to the facts of the case, noting

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## Parties

- **Judges:** Ina Mal…; Deepa Kr…; +1 more
- **Appellants:** M/s. K.K.R. India…
- **Respondents:** M/s. Kwalit…

## Timeline

- **2016-06-24 — Facility Ag…**: Facility Agreement executed for…
- **2016-06-29 — First Loan Dis…**: Rs. 350,000,000/-…

## 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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