# In the matter of NIhar Cotspin Private Limited C.P. (IB) 3708-2019

> NCLT judgment dated 2020-03-13. Citation: TCN-2020-NCLT-01551. Corporation Bank filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 13 Mar 2020
- **Citation:** TCN-2020-NCLT-01551
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nihar-cotspin-private-limited-cp-ib-3708-2019-1302e2b8

## Summary

### Background

Corporation Bank filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Nihar Cotspin Private Limited, alleging default in repayment of loan facilities. The financial creditor claimed that the corporate debtor failed to repay the loan amount, leading to the account being declared a Non-Performing Asset (NPA). The corporate debtor, on the other hand, contested the claims, citing a fire accident in their factory and suppression of material facts by the financial creditor.

## Facts

Corporation Bank, the financial creditor, filed a petition under Section 7 of the IBC, 2016, against Nihar Cotspin Private Limited, the corporate debtor, due to default in loan repayment. The financial creditor claimed a total default amount of Rs. 12,68,54,381.91, including principal and interest. The loan facilities were provided through sanction letters dated 13.05.2014 and 09.12.2015. The corporate debtor's account was declared an NPA on 01.12.2016. The financial creditor also invoked the SARFAESI Act and took symbolic possession of the corporate debtor's assets. The corporate debtor argued that a fire accident on 18.02.2018 impacted their ability to repay the debt and that the financial creditor suppressed material facts regarding payments made. The corporate

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## Issues and analysis

### Issue 1: Whether the petition filed by the Financial Creditor is in compliance with the provisions of …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a corporate

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**Reasoning:** The NCLT considered the documents submitted by the financial creditor, including loan

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** The NCLT applied the provisions of Section 7 to the facts of the case and

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## Parties

- **Judges:** Bhaskara Pantula…; Shyam Babu…
- **Appellants:** Corporatio…
- **Respondents:** Nihar Cotspin…

## Timeline

- **2013-05-24 — Corporate Debtor…**: Nihar Cotspin Private…
- **2014-05-13 — Sanction Le…**: Financial creditor provided loan/financial facility to the corporate debtor vide Sanction…

## 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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