# In the matter of Laxmivinayak Rice Mill Pvt. Ltd. CP (IB) No. 331-KB-2017

> NCLT judgment dated 2017-09-19. Citation: TCN-2017-NCLT-00394. Reliance Commercial Finance Limited filed a petition under Section 7 of the Insolvency &…

- **Court:** NCLT
- **Order date:** 19 Sept 2017
- **Citation:** TCN-2017-NCLT-00394
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/laxmivinayak-rice-mill-pvt-ltd-cp-ib-no-331-kb-2017-7400af3f

## Summary

### Background

Reliance Commercial Finance Limited filed a petition under Section 7 of the Insolvency & Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Laxmi Vinayak Rice Mill Private Limited, the Corporate Debtor. The petitioner claimed that the Corporate Debtor defaulted on a loan of Rs. 64,00,000/- extended on 31.12.2014, resulting in an outstanding exposure of Rs. 76,95,920/- as of 24.11.2016.

## Facts

Reliance Commercial Finance Limited (the petitioner/financial creditor) extended a loan of Rs. 64,00,000 to Laxmi Vinayak Rice Mill Private Limited (the corporate debtor) on 31.12.2014, formalized through a Loan-cum Hypothecation Agreement. As of 24.11.2016, the outstanding exposure, including principal, accrued interest, and penal interest, amounted to Rs. 76,95,920. The corporate debtor defaulted on the loan repayment. The petitioner filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The corporate debtor contended that a One Time Settlement (OTS) scheme was pending, and the petitioner had improperly deposited post-dated cheques. The corporate debtor also cited the

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## Issues and analysis

### Issue 1: Whether the objections raised by the Respondent/Corporate Debtor are sustainable under Section 7 of …

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

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**Reasoning:** The court found that the Corporate Debtor's contention regarding the pending OTS and the

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**Interpretation:** Section 7 requires the Adjudicating Authority to determine whether a default

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**Application:** In this case, the court applied the ratio by examining the documents submitted

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## Parties

- **Judges:** V. P. S…; Jinan…
- **Appellants:** Reliance Commercia…
- **Respondents:** Laxmi Vinayak…; LAXMIVINAYAK RICE…
- **Advocates:** Arnab Basu…

## Timeline

- **2014-12-31 — Loan Agre…**: Loan-cum Hypothecation Agreement executed between Reliance Commercial Finance Limited and…
- **2016-11-24 — Outstanding E…**: Outstanding exposure (including principal, accrued interest, and penal interest) was Rs.…

## 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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