# In the matter of Lotus Auto Engineering Ltd. CP No. (IB)-31-(PB)-2018

> NCLT judgment dated 2018-08-07. Citation: TCN-2018-NCLT-00989. Oriental Bank of Commerce filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 7 Aug 2018
- **Citation:** TCN-2018-NCLT-00989
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/lotus-auto-engineering-ltd-cp-no-ib-31-pb-2018-0a9aac00

## Summary

### Background

Oriental Bank of Commerce filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Lotus Auto Engineering Limited, the corporate debtor. The bank claimed to be a financial creditor. The application was filed due to the corporate debtor's default on a term loan of Rs. 175 Crores granted on 21.07.2011, and a subsequent term loan of Rs. 50 Crore on 31.12.2015. The applicant bank presented documents including sanction letters, board resolutions, and loan agreements to support its claim. The respondent company had approached the petitioner bank and submitted proposal for restructuring of loan vide letter dated 01.02.2017. Subsequently a joint lenders meeting was held on

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## Facts

Oriental Bank of Commerce, claiming to be a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Lotus Auto Engineering Limited, the corporate debtor. The corporate debtor availed a Term Loan for Rs. 175 Crores on 21.07.2011. The applicant bank relied on documents including sanction letters, board resolutions, and loan agreements. A Master Joint Lenders Forum Agreement was executed on 18.09.2015 among Oriental Bank of Commerce, Central Bank of India, and the Sarawat Co-operative Bank Ltd. The corporate debtor further availed a Term Loan of Rs. 50 Crore on 31.12.2015. As of 30.11.2017, the total amount of default due and payable by the corporate debtor was

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## Issues and analysis

### Issue 1: Whether the application filed by Oriental Bank of Commerce 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 Adjudicating Authority found that the applicant bank had established the existence of

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

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**Application:** In this case, the applicant bank provided sufficient evidence to prove the

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## Parties

- **Judges:** M. M. K…; S. K. MOH…
- **Appellants:** Oriental Bank of…
- **Respondents:** LOTUS AUTO…
- **Advocates:** S. K. S…; Arun Kath…; +2 more

## Timeline

- **2011-07-21 — Term Loan G…**: Term Loan for Rs. 175 Crores was granted to Lotus Auto Engineering Limited by Oriental…
- **2015-09-18 — Master Joint Lenders…**: Master Joint Lenders Forum Agreement was executed among Oriental Bank of Commerce,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60 — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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