# In the matter of NRC Limited

> NCLT judgment dated 2018-11-27. Citation: TCN-2018-NCLT-00285. Punjab National Bank filed a petition against NRC Limited under Section 7 of the Insolvency &…

- **Court:** NCLT
- **Order date:** 27 Nov 2018
- **Citation:** TCN-2018-NCLT-00285
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nrc-limited-6bafcb74

## Summary

### Background

Punjab National Bank filed a petition against NRC Limited under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The petition was based on NRC Limited's default in payment of Rs. 273,09,68,793 as of 31.03.2018, with the date of default being 11.02.2010. Promoters of NRC Limited filed intervention applications seeking adjournment of the petition, citing a pending writ petition in the Bombay High Court related to an OTS proposal. The NCLT considered the intervention applications and the main petition, examining the objections raised by the Corporate Debtor.

## Facts

Punjab National Bank (PNB) sanctioned various credit facilities to NRC Limited, the Corporate Debtor, including working capital fund-based limits, non-fund-based limits, and term loans, starting from 23.02.2005. The facilities were renewed and restructured over time. As of 31.03.2018, the total outstanding amount was Rs. 273,09,68,793. PNB issued a notice under Section 13(2) of the SARFAESI Act, 2002, on 31.12.2016, claiming Rs. 78,31,57,403 as of 11.02.2010, 12.02.2010, and 20.05.2010. The Corporate Debtor had made a reference to BIFR in 2008 and was declared a sick industrial company in 2009. The Corporate Debtor submitted an OTS proposal in 2013, which was later rejected by PNB on 31.10.2018. The Corporate Debtor's promoters filed intervention applications seeking

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## Issues and analysis

### Issue 1: Whether the intervention applications filed by the promoters of the Corporate Debtor should be …

**Ratio:** Promoters cannot stall the initiation of CIRP against the Corporate Debtor if the debt

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**Reasoning:** The NCLT found that the Corporate Debtor was trying to delay the CIRP. The court noted

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**Interpretation:** The court interpreted that the pendency of a writ petition related to an OTS

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**Application:** The NCLT applied the ratio by dismissing the intervention applications, as the

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## Parties

- **Judges:** Bhaskara Pantula…; V. Nallasen…
- **Appellants:** Punjab National…
- **Respondents:** NRC Lim…
- **Advocates:** Pankaj Vi…; Rohini…; +4 more

## Timeline

- **2005-02-23 — Sanction of Fa…**: Punjab National Bank sanctioned working capital fund-based limits, non-fund-based limits,…
- **2006-02-02 — Short Ter…**: Punjab National Bank sanctioned a short-term…

## 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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