# In the matter of Mithila Cars Pvt. Ltd. CP No. 939-IBC-NCLT-MB-MAH-2020

> NCLT judgment dated 2021-04-30. Citation: TCN-2021-NCLT-02234. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 30 Apr 2021
- **Citation:** TCN-2021-NCLT-02234
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/mithila-cars-pvt-ltd-cp-no-939-ibc-nclt-mb-mah-2020-0c18a94d

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Abhyudaya Co-operative Bank Ltd. (Financial Creditor) against Mithila Cars Pvt. Ltd. (Corporate Debtor) for initiation of Corporate Insolvency Resolution Process (CIRP) due to default in repayment of financial debt. The Financial Creditor claimed that the Corporate Debtor defaulted on loan repayments, leading to the account being classified as Non-Performing Asset (NPA).

## Facts

Abhyudaya Co-operative Bank Ltd. (Financial Creditor) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Mithila Cars Pvt. Ltd. (Corporate Debtor). The Financial Creditor had sanctioned a term loan of Rs. 23,25,00,000/- to the Corporate Debtor vide sanction letter dated 03.04.2017. Subsequently, an amount of Rs. 16,50,00,000/- was further sanctioned vide sanction letter dated 21.08.2018, out of which Rs. 5 crores were disbursed, and the balance amount of Rs. 11,50,00,000/- was cancelled. A cash credit facility of Rs. 10 crores was also granted vide sanction letter dated 21.08.2018, but it was later cancelled. The account was declared NPA on 31.03.2019. As of 06.11.2019, the total outstanding against the Corporate Debtor, including

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted on its …

**Ratio:** The legal principle is that if a corporate debtor fails to repay a financial debt to a

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**Reasoning:** The court relied on the loan documents, sanction letters, and bank statements provided by

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**Interpretation:** The court interpreted the term 'default' under the IBC to mean the non-payment

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**Application:** The court applied the ratio to the facts of the case, noting that the Corporate

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## Parties

- **Judges:** SUCHITRAKAN…; Chandra Bha…
- **Appellants:** Abhyudaya…
- **Respondents:** Mithila Cars Pvt.…

## Timeline

- **2017-04-03 — Sanction…**: The Financial Creditor sanctioned a term loan of Rs. 23,25,00,000/- to the Corporate…
- **2017-08-28 — Execution of Loan…**: The Corporate Debtor executed various loan documents, including a demand promissory note…

## 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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