# In the matter of Opto Infrastructure Limited C.P. No. 125 of 2014 (T.P. No. 01 of 2019)

> NCLT judgment dated 2019-07-25. Citation: TCN-2019-NCLT-02308. The Bank of Nova Scotia initiated a Corporate Insolvency Resolution Process (CIRP) against Opto…

- **Court:** NCLT
- **Order date:** 25 Jul 2019
- **Citation:** TCN-2019-NCLT-02308
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/opto-infrastructure-limited-cp-no-125-of-2014-tp-no-01-of-2019-07782250

## Summary

### Background

The Bank of Nova Scotia initiated a Corporate Insolvency Resolution Process (CIRP) against Opto Infrastructure Limited due to a default on credit facilities amounting to Rs. 213,67,42,263.02 as of July 31, 2018. The initial petition was filed with the High Court of Karnataka under Sections 433(e) & (f), 434, and 439 of the Companies Act, 1956, seeking to wind up Opto Infrastructure Limited. Subsequently, the case was transferred to the National Company Law Tribunal (NCLT), Bengaluru Bench, following amendments to the Companies Act. The bank had provided various credit facilities to Opto Circuits, guaranteed by Opto Infrastructure Limited, which were not repaid despite multiple extensions and addendums to the facility letter.

## Facts

The Bank of Nova Scotia, an international bank, extended credit facilities to Opto Circuits (India) Limited, a sister concern of Opto Infrastructure Limited. These facilities were guaranteed by Opto Infrastructure Limited through a corporate guarantee dated December 12, 2012. The credit facilities included overdraft, short-term working capital, bills discounting, bank guarantees, export packing credit, export bills discounting, and letters of credit, with an aggregate limit of Rs. 1,000,000,000. Opto Circuits defaulted on these facilities, leading to outstanding dues of Rs. 35,878,252 as of May 31, 2013. The bank issued recall letters and addendums to the facility letter, but Opto Circuits failed to meet its repayment commitments. As of February 10, 2014, the total

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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:** The Hon'ble NCLAT vide order dated 15th May, 2017 passed in Company Appeal (AT)

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**Reasoning:** The NCLT referred to the process of initiation of Insolvency Resolution process by a

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**Interpretation:** Section 7 of the Insolvency and Bankruptcy Code, 2016, outlines the procedure

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**Application:** The NCLT found that the Bank of Nova Scotia had complied with the requirements

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## Parties

- **Judges:** Rajeswara Rao…
- **Appellants:** The Bank of Nova…
- **Respondents:** Opto Infrastructur…
- **Advocates:** Arun K…; Shubhang…

## Timeline

- **2012-11-28 — Facility…**: Facility Letter dated 28.11.2012 proposing to make certain Credit Facilities available to…
- **2012-12-12 — Deed of Corporate…**: The Respondent had guaranteed the Credit Facilities provided by the Petitioner to Opto…

## 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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