# In the matter of Leather World India Limited CP (IB) No. 432-KB-2018

> NCLT judgment dated 2018-06-13. Citation: TCN-2018-NCLT-01279. IDBI Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 13 Jun 2018
- **Citation:** TCN-2018-NCLT-01279
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/leather-world-india-limited-cp-ib-no-432-kb-2018-32e5f6af

## Summary

### Background

IDBI Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Leather World India Limited, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was based on the corporate debtor's default in repaying a loan. The financial creditor claimed a default amount of Rs. 15,00,86,035.43 as of 15.03.2018. The corporate debtor failed to repay the loan despite numerous communications and a proposed One Time Settlement, which was rejected by the financial creditor.

## Facts

IDBI Bank Limited, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Leather World India Limited, the corporate debtor. The application was based on the corporate debtor's default in repaying a loan. The total amount of default claimed by the financial creditor as of 15.03.2018 was Rs. 15,00,86,035.43. The debt was secured by hypothecation of assets. The financial creditor had sanctioned a credit facility of Rs. 13 crores to the corporate debtor vide two sanction letters dated 20.06.2015 and 09.09.2016. The corporate debtor's account was declared a non-performing asset (NPA) on 30.12.2016. The financial creditor issued a recall notice on

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** The adjudicating authority must ascertain the existence of default from the records of

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**Reasoning:** The court relied on the NCLAT's decision in Innoventive Industries Ltd. vs. ICICI Bank

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**Interpretation:** Section 7 of the Insolvency and Bankruptcy Code, 2016, provides the procedure

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**Application:** The court found that the application filed by IDBI Bank Limited was complete in

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## Parties

- **Judges:** Jinan…; Madan B.…
- **Appellants:** IDBI Bank L…
- **Respondents:** Leather World…

## Timeline

- **2015-06-27 — Guarantee Ag…**: Guarantee Agreement executed by Rohot Rishav and Ranjan Rishav, directors of the…
- **2015-06-20 — Sanction…**: One of the two sanction letters for…

## 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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