# In the matter of Manali Sugars  Limited C.P. (IB) No. 35-BB-2021

> NCLT judgment dated 2021-03-22. Citation: TCN-2021-NCLT-02614. The case involves an application filed by M/s. Shri Siddeshwar Souhard Sahakari Niyamit…

- **Court:** NCLT
- **Order date:** 22 Mar 2021
- **Citation:** TCN-2021-NCLT-02614
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/manali-sugars-limited-cp-ib-no-35-bb-2021-4e03a546

## Summary

### Background

The case involves an application filed by M/s. Shri Siddeshwar Souhard Sahakari Niyamit Co-operative Bank, the Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Manali Sugars Limited, the Corporate Debtor. The Financial Creditor claims that the Corporate Debtor has defaulted on a total amount of Rs. 49,90,10,000/-. The Corporate Debtor admits to the default due to financial constraints.

## Facts

M/s. Shri Siddeshwar Souhard Sahakari Niyamit Co-operative Bank, registered on 2006-01-16, filed a petition under Section 7 of the IBC to initiate CIRP against M/s. Manali Sugars Limited, incorporated on 1995-07-26. Manali Sugars Limited had an authorized share capital of Rs. 40,00,00,000 and a paid-up share capital of Rs. 33,49,20,290. They availed a cash credit facility up to Rs. 37,71,40,000 at 16% interest per annum from the Financial Creditor, effective from 2018-03-31 to 2019-03-31. The Corporate Debtor defaulted on a total amount of Rs. 49,90,10,000, including a principal amount of Rs. 43,39,22,000 and interest of Rs. 6,50,88,000. The date of default was recorded as 2019-03-31. The Corporate Debtor admitted to facing cash-flow insolvency and breaching financial

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor committed a default in …

**Ratio:** The ratio is based on Section 7 of the IBC, which allows a financial creditor to initiate

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**Reasoning:** The Corporate Debtor admitted to the default due to financial constraints, and the

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**Interpretation:** The interpretation of 'default' under Section 7 of the IBC includes the failure

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**Application:** The Corporate Debtor's admission and the Financial Creditor's evidence

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** M/s. Shri…
- **Respondents:** M/s. Manali…

## Timeline

- **2006-01-16 — Registration of…**: M/s. Shri Siddeshwar Souhard Sahakari…
- **1995-07-26 — Incorporation of…**: M/s. Manali Sugars…

## 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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