# 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-01570. 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-01570
- **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-20-536b22e0

## Summary

### Background

Bank of India 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, 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 cash credit term loans, from the applicant/financial creditor. The loans were secured by hypothecation of movables and mortgage of immovable properties. The loan accounts slipped into non-performing assets on 15.05.2014, and 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 cash credit term loans, from the applicant/financial creditor, secured by hypothecation of movables and mortgage of immovable properties. The loan accounts became non-performing assets (NPA) on 15.05.2014. Despite repeated reminders, the corporate debtor failed to repay the loan. The corporate debtor stated that it had approached the applicant's bank for enhancement

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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 it was undisputed that the Financial Creditor had granted

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**Interpretation:** Section 7 of IBC provides a mechanism for financial creditors to initiate CIRP

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**Application:** The court applied Section 7 of IBC to the facts of the case, noting that the

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## Parties

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

## Timeline

- **2014-05-15 — Loan Accounts B…**: The loan accounts of the Corporate Debtor…
- **2018-08-08 — Default…**: The Corporate Debtor defaulted on a…

## 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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