# In the matter of Muskaan Power Infrastructure Limited CP (IB) No. 39-Chd-Pb-2017

> NCLT judgment dated 2017-07-28. Citation: TCN-2017-NCLT-00691. Sunrise 14 A/S, Denmark, filed a petition under Section 7 of the Insolvency & Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 28 Jul 2017
- **Citation:** TCN-2017-NCLT-00691
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/muskaan-power-infrastructure-limited-cp-ib-no-39-chd-pb-2017-e2e464af

## Summary

### Background

Sunrise 14 A/S, Denmark, filed a petition under Section 7 of the Insolvency & Bankruptcy Code, 2016, against Muskaan Power Infrastructure Limited, claiming to be a Financial Creditor. The Financial Creditor extended a Trade Finance Facility to the Corporate Debtor to the extent of USD 600,000, for which an agreement was entered into on 01.01.2016. The Corporate Debtor failed to make payments under the invoices, leading to the issuance of reminder notices and a demand notice. The Corporate Debtor raised objections, claiming misrepresentation and default by the Financial Creditor, and also argued that the contract was governed by English law and subject to arbitration in London.

## Facts

Sunrise 14 A/S, a Danish company, extended a Trade Finance Facility of USD 600,000 to Muskaan Power Infrastructure Limited, the Corporate Debtor, under an agreement dated 01.01.2016. The Corporate Debtor was to sell goods to its buyers through the Financial Creditor. The agreement stipulated that the Corporate Debtor would assign all rights to the purchase price under each purchase order. The Financial Creditor extended loans up to 80% of the purchase price. The Corporate Debtor failed to make payments under the invoices, leading to the issuance of reminder notices and a demand notice dated 29.08.2016. The Corporate Debtor responded on 04.09.2016, raising objections. The total debt claimed was USD 180,503, with a default amount of USD 190,210 including interest. The

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## Issues and analysis

### Issue 1: Whether the petitioner, Sunrise 14 A/S, falls within the definition of 'Financial Creditor' under …

**Ratio:** Section 5(7) of the IBC defines a 'Financial Creditor' as any person to whom a financial

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**Reasoning:** The court reasoned that the trade finance facility extended by Sunrise 14 A/S to Muskaan

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**Interpretation:** The court interpreted the definition of 'financial debt' broadly to include

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**Application:** The court applied the definition of 'financial creditor' and 'financial debt'

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## Parties

- **Judges:** R.P.Nag…
- **Appellants:** Sunrise 1…
- **Respondents:** Muskaan Power…

## Timeline

- **2016-01-01 — Agreement…**: Agreement entered into between Sunrise 14 A/S and Muskaan Power Infrastructure Limited…
- **2016-01-21 — Promissory No…**: Demand promissory note dated 21.01.2016 was…

## 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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