# In the matter of MAA Tarini Industries Limited CP (IB) No. 135-CTB-2019

> NCLT judgment dated 2021-07-26. Citation: TCN-2021-NCLT-01606. PEC Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 26 Jul 2021
- **Citation:** TCN-2021-NCLT-01606
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/maa-tarini-industries-limited-cp-ib-no-135-ctb-2019-2f266dfe

## Summary

### Background

PEC Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Maa Tarini Industries Limited, the Corporate Debtor. The Financial Creditor claimed to have extended financing facilities to the Corporate Debtor under an Associateship Agreement dated 05.10.2012, which was further extended by addendums. The Corporate Debtor disputed that the Petitioner is a Financial Creditor, arguing that the agreement envisaged the Applicant supplying services for which payment would be made, thus not falling under the definition of Financial Creditor under the IBC. The Financial Creditor argued that the relevant clauses/documents ascertain that the nature of

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## Facts

PEC Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Maa Tarini Industries Limited (Corporate Debtor). PEC Limited claimed to have extended financing facilities to Maa Tarini Industries Limited under an Associateship Agreement dated 05.10.2012, which was further extended by addendums. The Associateship Agreement provided that PEC would finance Maa Tarini Industries for the purchase of iron ore and coal. Maa Tarini Industries issued post-dated cheques as security for the financed amount. Maa Tarini Industries disputed that PEC is a Financial Creditor, arguing that the agreement envisaged PEC supplying services for which payment would be made.

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## Issues and analysis

### Issue 1: Whether the debt owed by the Corporate Debtor to the Financial Creditor qualifies as a 'Financial …

**Ratio:** Section 2(8) of the IBC defines 'financial debt' as a debt along with interest, if any,

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**Reasoning:** The NCLT analyzed the Associateship Agreement and related documents to determine whether

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**Interpretation:** The court interpreted Section 2(8) to mean that any debt disbursed for the time

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**Application:** The court applied the definition of 'financial debt' to the facts of the case

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## Parties

- **Judges:** Rajasekha…; Satya Ranjan…
- **Appellants:** PEC Lim…
- **Respondents:** MAA TARINI…

## Timeline

- **2012-10-05 — Associateship…**: Financial Creditor extended financing facility to Corporate Debtor vide Associateship…
- **2015-11-18 — Acknowledgemen…**: Corporate Debtor…

## 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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