# In the matter of Pandit Automotive Private Limited CP No. 1624-IBC-NCLT-MB-MAH-2017

> NCLT judgment dated 2018-03-12. Citation: TCN-2018-NCLT-01723. Reliance Commercial Finance Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 12 Mar 2018
- **Citation:** TCN-2018-NCLT-01723
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/pandit-automotive-private-limited-cp-no-1624-ibc-nclt-mb-mah-2017-133c1a67

## Summary

### Background

Reliance Commercial Finance Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Pandit Automotive Private Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The application was based on the alleged default in repayment of a financial debt. The corporate debtor had requested Reliance Capital Limited (original lender) for a loan of ₹10,00,00,000 as a short-term working capital facility, which was sanctioned. Reliance Capital Limited and the Debtor entered into a Trade Finance Agreement dated 10.12.2009, with a repayment agreement within 60 days. Reliance Commercial Capital demerged its finance business, resulting in M/s. Reliance Commercial Finance Limited becoming the financial creditor.

## Facts

M/s. Pandit Automotive Private Limited (Corporate Debtor) requested a loan of ₹10,00,00,000 from Reliance Capital Limited (Original Lender) on 2009-12-10 as a short-term working capital facility. Reliance Capital Limited sanctioned the loan. A Trade Finance Agreement was entered into on 2009-12-10, stipulating repayment within 60 days. The loan was initially sanctioned at an interest rate of 16.25% per annum, with an additional 1.75% per annum in case of default. Reliance Commercial Capital demerged its finance business, with M/s. Reliance Commercial Finance Limited becoming the financial creditor. The Debtor defaulted on 2016-09-07. The Debtor executed a Demand Promissory Note on 2009-12-12 for ₹10,00,00,000. The Debtor issued a cheque for ₹3,99,39,465.27 on

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## Issues and analysis

### Issue 1: Whether the nature of the debt is a 'Financial Debt' as defined under Section 5(8) of the …

**Ratio:** Section 5(8) of the Insolvency and

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**Reasoning:** The NCLT considered the facts and submissions and concluded that the debt in question

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**Interpretation:** The interpretation of 'Financial Debt' under Section 5(8) is crucial for

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**Application:** The NCLT applied the definition of 'Financial Debt' to the facts of the case,

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## Parties

- **Judges:** M.K. Sh…; Bhaskara Pantula…
- **Appellants:** Reliance Commercia…
- **Respondents:** Pandit Automotive…; Mes. Pandit…

## Timeline

- **2009-12-10 — Loan Req…**: The Debtor requested a loan of…
- **2009-12-10 — Trade Finance…**: Reliance Capital Limited and the Debtor…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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