# In the matter of Moving Picture Company (India) Limited (IB) 1368 (ND)-2018

> NCLT judgment dated 2019-06-11. Citation: TCN-2019-NCLT-02986. Virgo Services Private Limited filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 11 Jun 2019
- **Citation:** TCN-2019-NCLT-02986
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/moving-picture-company-india-limited-ib-1368-nd-2018-891fde99

## Summary

### Background

Virgo Services Private Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against Moving Picture Company (India) Limited, claiming to be a financial creditor. The petitioner claims that the corporate debtor is registered under the Companies Act, 1956. The respondent corporate debtor was incorporated on 01.06.1989. A loan agreement was entered into on 11th June 2018, where the corporate debtor was given a facility to borrow up to Rs. 25,00,000/-. An amount of Rs. 20,00,000/- was disbursed in two tranches on 13th June 2018 and 19th June 2018.

## Facts

Virgo Services Private Limited (the petitioner) claimed to be a financial creditor of Moving Picture Company (India) Limited (the respondent/corporate debtor). A loan agreement was executed on June 11, 2018, allowing the corporate debtor to borrow up to Rs. 25,00,000/-. The petitioner disbursed Rs. 20,00,000/- in two tranches on June 13 and June 19, 2018. Interest was set at 1.25% per month, with a penal interest of 18% per annum for defaults. The corporate debtor paid Rs. 61,755/- in interest for two-and-a-half months, ceasing payments after August 31, 2018, resulting in a default from September 1, 2018. The financial creditor sent letters on September 15 and 22, 2018, demanding repayment. The respondent argued that the financial creditor had promised further funding

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## Issues and analysis

### Issue 1: Whether the disbursement of the loan amount constitutes a 'financial debt' as defined under the …

**Ratio:** A 'financial debt' is defined as a debt along with interest, if any, which is disbursed

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**Reasoning:** The NCLT reasoned that the disbursement of Rs. 20,00,000/- by the financial creditor to

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**Interpretation:** The interpretation of 'financial debt' under the IBC encompasses any debt

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**Application:** In this case, the disbursement of the loan amount with an agreed interest rate

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## Parties

- **Judges:** Ina Mal…; DeepaKr…
- **Appellants:** Virgo Services…
- **Respondents:** Moving Picture…

## Timeline

- **1956-01-01 — Companies Ac…**: The petitioner claims that it is a company registered under the provisions of Companies…
- **1989-06-01 — Incorporation of…**: The Respondent Corporate Debtor, is 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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