# In the matter of  Luni Power Company Pvt. Ltd.CP (IB) No. 122-Chd-HP-2019

> NCLT judgment dated 2019-12-23. Citation: TCN-2019-NCLT-00019. The Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 23 Dec 2019
- **Citation:** TCN-2019-NCLT-00019
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/luni-power-company-pvt-ltdcp-ib-no-122-chd-hp-2019-309671d0

## Summary

### Background

The Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Luni Power Company Private Limited, referred to as the Corporate Debtor. The Corporate Debtor had been availing loan facilities from the Financial Creditor since 2012, with a term loan of Rs. 15 crores sanctioned to set up a 4.5 MW Hydro Power Project. The Corporate Debtor defaulted in repayment, leading to the account being classified as NPA on 07.06.2017. A demand notice was issued on 06.12.2018, but no payment was received. The Corporate Debtor submitted an OTS proposal on 19.11.2018, which the Financial Creditor did not approve before initiating CIRP.

## Facts

Central Bank of India, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Luni Power Company Private Limited, the Corporate Debtor. The Corporate Debtor had been availing loan facilities since 2012 and was sanctioned a term loan of Rs. 15 crores to establish a 4.5 MW Hydro Power Project. The project's COD (Commercial Operation Date) was envisaged on 31.03.2017, with repayment scheduled to commence in June 2017. The Corporate Debtor defaulted on repayments, leading to the account being classified as Non-Performing Asset (NPA) on 07.06.2017. As of 31.12.2018, the total amount due was Rs. 17,44,85,568.00, including interest. The loan was secured by

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiation …

**Ratio:** Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016, states that the Adjudicating

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had defaulted in the repayment

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The Adjudicating Authority applied Section 7(5)(a) to the facts of the case and

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## Parties

- **Judges:** M. M. K…; Pradeep R.…
- **Appellants:** Central Bank of…
- **Respondents:** Luni Power…; M/s Luni Power…

## Timeline

- **2012-01-01 — Loan Avai…**: Corporate Debtor started availing loan…
- **2016-03-05 — COD of the…**: Letter dated 05.03.2016 COD of the…

## 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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