# In the matter of Nexus Electro Steel Limited IBA-377-2020

> NCLT judgment dated 2021-03-30. Citation: TCN-2021-NCLT-02531. The case involves an application filed by State Bank of India (Financial Creditor) under…

- **Court:** NCLT
- **Order date:** 30 Mar 2021
- **Citation:** TCN-2021-NCLT-02531
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nexus-electro-steel-limited-iba-377-2020-c3bcb7ce

## Summary

### Background

The case involves an application filed by State Bank of India (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiating Corporate Insolvency Resolution Process (CIRP) against M/s. Nexus Electro Steel Limited (Corporate Debtor). The application is based on the Corporate Debtor's alleged default in repaying an amount of Rs. 81,70,35,659.53 as of 29.01.2020, as per a DRT Order dated 29.01.2020. The Corporate Debtor had submitted a loan application on 30.08.2007 for availing credit facilities for business expansion. The Financial Creditor sanctioned credit facilities of Rs. 20 Crores (Fund Based Limit Rs. 15 Crores and Non-Fund Based

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## Facts

M/s. State Bank of India (Financial Creditor) filed an application under Section 7 of the IBC against M/s. Nexus Electro Steel Limited (Corporate Debtor) for defaulting on a debt of Rs. 81,70,35,659.53 as of 29.01.2020. The Corporate Debtor had applied for a loan on 30.08.2007, and the Financial Creditor sanctioned Rs. 20 Crores on 21.11.2007 and 05.12.2007. The Corporate Debtor executed loan security documents. The credit facilities were enhanced to Rs. 64.70 Crore until 12.01.2017. The Corporate Debtor defaulted, leading to NPA classification and recall notice on 31.08.2017. A demand notice was issued on 25.01.2018 under SARFAESI Act. The Financial Creditor filed OA No. 170 of 2018 before DRT-I, Chennai. An earlier IBC application (IBA/796/2019) was withdrawn after a

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## Issues and analysis

### Issue 1: Whether the Financial Creditor has proved the existence of debt and default on the part of the …

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

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**Reasoning:** The court reasoned that the Financial Creditor had submitted sufficient documents,

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**Interpretation:** Section 7 of the IBC is interpreted to mean that if a financial creditor

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**Application:** In this case, the Financial Creditor provided evidence of the loan agreement,

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## Parties

- **Judges:** R. Sucha…; B. Anil Ku…
- **Appellants:** State Bank of…
- **Respondents:** Nexus Electro…
- **Advocates:** Shri. M.L.…; Shri. R. Si…

## Timeline

- **2007-08-30 — Loan Appli…**: The Corporate Debtor submitted a loan…
- **2007-11-21 — Credit Facilities…**: The Financial Creditor sanctioned credit facilities of Rs. 20 Crores (Fund Based Limit…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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