# In the matter of Nayaagarh Sugar Complex Limited CP (IB) No.51-CTB-2020

> NCLT judgment dated 2021-12-22. Citation: TCN-2021-NCLT-00071. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 22 Dec 2021
- **Citation:** TCN-2021-NCLT-00071
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nayaagarh-sugar-complex-limited-cp-ib-no51-ctb-2020-ab3a8445

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Encore Asset Reconstruction Company Private Limited against Nayagarh Sugar Complex Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The application was initially filed due to defaults on loans originally sanctioned by Indian Bank, which later assigned the debt to Encore Asset Reconstruction Company. The corporate debtor's account was classified as NPA, and notices were issued regarding the default. The corporate debtor's address issues complicated the service of notices.

## Facts

Encore Asset Reconstruction Company Private Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Nayagarh Sugar Complex Limited. The corporate debtor, Nayagarh Sugar Complex Limited, had taken various term loans from Indian Bank, including MTL-I, MTL-II, FITL-I, and FITL-II, amounting to Rs. 300 lakhs, Rs. 248 lakhs, Rs. 8,06,875, and Rs. 20,04,815 respectively. Subsequently, the account was transferred to Encore Asset Reconstruction Company Private Limited via an assignment deed dated 21.12.2017. Indian Bank had classified the account as NPA on 30.06.2015, with an outstanding amount of Rs. 1,36,84,346/- plus interest. The financial creditor issued a notice on 14.05.2019. The corporate debtor acknowledged the debt in its

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

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

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**Reasoning:** The court considered the application filed by Encore Asset Reconstruction Company Private

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**Interpretation:** Section 7 of the IBC provides a mechanism for financial creditors to recover

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**Application:** The court found that Encore Asset Reconstruction Company Private Limited, as

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## Parties

- **Judges:** Mohan…; Satya Ranjan…
- **Appellants:** Encore Asset…
- **Respondents:** Nayagarh Sugar…

## Timeline

- **2015-06-30 — Account Classified as…**: Indian Bank classified the account of Nayagarh Sugar Complex Limited as Non-Performing…
- **2017-04-13 — Board Resolut…**: Board of resolution dated 13.04.2017, thereby seeking initiation of Corporate Insolvency…

## 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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