# In the matter of Mohak Carpets Pvt. Ltd. CP (IB) No. 271-Chd-Pb-2018

> NCLT judgment dated 2018-10-08. Citation: TCN-2018-NCLT-00642. The petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate…

- **Court:** NCLT
- **Order date:** 8 Oct 2018
- **Citation:** TCN-2018-NCLT-00642
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/mohak-carpets-pvt-ltd-cp-ib-no-271-chd-pb-2018-c19093d2

## Summary

### Background

The petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate the insolvency resolution process against the respondent-corporate debtor. The petitioner, JFC Finance (India) Limited, a Non-Banking Financial Institution (NBFC), filed the application based on a resolution dated 09.08.2018. The respondent, Mohak Carpets Private Limited, allegedly defaulted on a loan facility agreement. The application was supported by documents including the loan agreement, bank statements, and bounced cheque.

## Facts

JFC Finance (India) Limited, a Non-Banking Financial Institution (NBFC), extended a loan of ₹10,00,000 to Mohak Carpets Private Limited under a Loan Facility Agreement dated 25.05.2018. The loan was to be repaid in 10 equal monthly installments of ₹1,15,000 along with 18% interest per annum. The loan was disbursed on 28.05.2018. The respondent issued a cheque for ₹1,20,000 dated 28.06.2018 towards the first installment, which bounced on 30.06.2018 due to insufficient funds. The petitioner called upon the respondent to make the payment, and the respondent conceded its default. The amount in default was ₹10,37,017 as on 08.08.2018, including interest. The respondent did not oppose the admission of the petition.

## Issues and analysis

### Issue 1: Whether the petitioner, JFC Finance (India) Limited, has met the requirements of Section 7 of the …

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

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**Reasoning:** The court observed that the petitioner had produced all the necessary documents,

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**Interpretation:** Section 7 is interpreted to mean that if a financial creditor provides

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**Application:** In this case, the petitioner provided the loan agreement, bank statements, and

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## Parties

- **Judges:** R.P.Nag…; Pradeep R.…
- **Appellants:** JFC FINANCE…
- **Respondents:** Mohak Carpets…

## Timeline

- **2018-05-25 — Loan Facility…**: Mohak Carpets Private Limited entered into a Loan Facility Agreement with JFC Finance…
- **2018-05-28 — Loan Disb…**: JFC Finance (India) Limited disbursed the loan…

## 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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