# In the matter of Narayani Steels Limited C.P. No.986-KB-2020

> NCLT judgment dated 2021-03-24. Citation: TCN-2021-NCLT-02580. ICICI Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 24 Mar 2021
- **Citation:** TCN-2021-NCLT-02580
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/narayani-steels-limited-cp-no986-kb-2020-ec5eb15b

## Summary

### Background

ICICI Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Narayani Steels Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The application was filed due to the corporate debtor's failure to repay a debt of Rs. 10,15,65,418.16 as of July 31, 2020, under a credit arrangement. The corporate debtor had entered into an agreement to purchase iron and steel products from Rashtriya Ispat Nigam Limited (RINL) and availed financial assistance in the nature of over draft facility not exceeding Rs. 9,50,00,000/-.

## Facts

ICICI Bank Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Narayani Steels Limited, the Corporate Debtor. The Corporate Debtor had a share capital of Rs. 14,00,00,000. ICICI Bank had granted a revolving line of credit to the Corporate Debtor, aggregating to Rs. 9,50,00,000. As of July 31, 2020, the amount in default was Rs. 10,15,65,418.16. A Facility Recall Notice was sent to the Corporate Debtor on February 24, 2020. The Corporate Debtor claimed that the COVID-19 pandemic disrupted its business, preventing it from settling the accounts. However, the Corporate Debtor's counsel admitted there was no valid defense against the claim of the Financial Creditor. The Financial Creditor proposed Mr.

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## Issues and analysis

### Issue 1: Whether the application filed by ICICI Bank Limited under Section 7 of the Insolvency and …

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

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**Reasoning:** The NCLT considered the documents and arguments presented by both parties and found that

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The NCLT applied Section 7 to the facts of the case, noting that the Financial

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## Parties

- **Judges:** Rajasekha…; Harish Chander…
- **Appellants:** ICICI Bank…
- **Respondents:** Narayani Steels…
- **Advocates:** Soorjya G…; Pooja Chakr…; +4 more

## Timeline

- **2017-01-13 — Credit Arrangement…**: A Credit Arrangement Letter was dated January 13, 2017, facilitating a line of credit in…
- **2018-05-28 — Transaction…**: A Transaction Letter dated May 28, 2018, extended the period of drawals under the OD…

## 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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