# In the matter of Maa Durga Rice Products Private Limited TP No. 36-CTB-2019 in CP (IB) No. 1292-KB-2018

> NCLT judgment dated 2019-09-04. Citation: TCN-2019-NCLT-01574. Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 4 Sept 2019
- **Citation:** TCN-2019-NCLT-01574
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/maa-durga-rice-products-private-limited-tp-no-36-ctb-2019-in-cp-ib-no-1292-kb-20-00c2b5b9

## Summary

### Background

Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process against M/s Maa Durga Rice Product Private Limited, the corporate debtor, due to default in paying a financial debt of Rs. 63,40,68,149/- as of 08.08.2018. The corporate debtor had availed financial facilities, including a cash credit term loan, from the applicant bank. The loan was secured by hypothecation of movables and mortgage of immovable properties. The loan account slipped into non-performing assets on 15.05.2014. Despite repeated reminders, the corporate debtor failed to repay the loan.

## Facts

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 M/s Maa Durga Rice Product Private Limited, the corporate debtor. The corporate debtor defaulted on a financial debt of Rs. 63,40,68,149/- as of 08.08.2018. The corporate debtor had availed financial facilities, including a cash credit term loan, from the bank, secured by hypothecation and mortgage. The loan account became a non-performing asset (NPA) on 15.05.2014. The corporate debtor failed to repay the loan despite repeated reminders. The corporate debtor argued that they were not given enhancement of the loan and settlement talks failed. The applicant bank stated that the

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## Issues and analysis

### Issue 1: Whether Bank of India/Financial Creditor can start Corporate Insolvency Resolution Process of the …

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

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**Reasoning:** The court reasoned that the financial creditor had granted financial assistance, and the

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**Interpretation:** Section 7 of the IBC is interpreted to allow the initiation of CIRP when a

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**Application:** The court applied the ratio to the facts by noting that Bank of India had

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## Parties

- **Judges:** Sucharit…; Satya Ranjan…
- **Appellants:** Bank of…
- **Respondents:** M/s Maa Durga…
- **Advocates:** Keshab Chandra…; Durga Prasa…

## Timeline

- **2014-05-15 — Loan Account Classified…**: The loan account of M/s Maa Durga Rice Product Private Limited slipped into…
- **2018-08-08 — Default…**: The Corporate Debtor committed default in…

## 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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