# In the matter of Loyal Motors Private Limited CP (IB) -4321-I&BP-MB-2018

> NCLT judgment dated 2019-01-28. Citation: TCN-2019-NCLT-05138. Central Bank of India filed a petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 28 Jan 2019
- **Citation:** TCN-2019-NCLT-05138
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/loyal-motors-private-limited-cp-ib-4321-ibp-mb-2018-5fffc4b7

## Summary

### Background

Central Bank of India filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Loyal Motors Private Limited. The bank claimed that the corporate debtor defaulted on payments amounting to Rs. 11,70,34,831/- including interest. The corporate debtor raised objections, including discrepancies in the claimed amount, the pendency of SARFAESI proceedings, and the validity of the power of attorney submitted by the petitioner.

## Facts

Central Bank of India (the Petitioner) sought to initiate Corporate Insolvency Resolution Process (CIRP) against Loyal Motors Private Limited (the Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The basis for the petition was the Corporate Debtor's default in making payments amounting to Rs. 11,70,34,831/- including interest. The default was related to credit facilities enhanced to the Corporate Debtor from Rs. 1,40,00,000/- to Rs. 3,95,00,000/-, comprising Cash Credit and Overdraft facilities. The Corporate Debtor had created an equitable mortgage over its properties, registered with the Registrar of Companies on 08.03.2008. The Petitioner issued a demand notice on 21.03.2009 under Section 13(2) of the SARFAESI Act, classifying the

…

## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in repayment of the loan dues to the Financial Creditor, …

**Ratio:** The Adjudicating Authority must be satisfied that a default has occurred and that the

…

**Reasoning:** The NCLT, upon perusal of the documents filed by the Creditor, was of the view that the

…

**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to ascertain the

…

**Application:** In this case, the NCLT found sufficient evidence in the documents filed by the

…

## Parties

- **Judges:** Bhaskara Pantula…; V. Nallasen…
- **Appellants:** Central Bank of…
- **Respondents:** Loyal Motors…

## Timeline

- **2008-02-09 — Sanction…**: The Petitioner enclosed a sanction letter dated 09.02.2008 which shows that the credit…
- **2008-03-08 — Equitable M…**: The Corporate Debtor created an equitable mortgage over various properties of the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 2 — Application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-2)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-chandigarh/loyal-motors-private-limited-cp-ib-4321-ibp-mb-2018-5fffc4b7