# In the matter of Paramount Propbuild Pvt. Ltd. Company Petition No. IB 1678-ND-2018

> NCLT judgment dated 2020-08-27. Citation: TCN-2020-NCLT-00769. Morgan Asia Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 27 Aug 2020
- **Citation:** TCN-2020-NCLT-00769
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/paramount-propbuild-pvt-ltd-company-petition-no-ib-1678-nd-2018-6e00be43

## Summary

### Background

Morgan Asia Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Paramount Propbuild Pvt. Ltd., seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was based on a default in repayment of a loan provided by Morgan Asia to Paramount Propbuild, secured by collateral of 13 apartments. The corporate debtor, Paramount Propbuild, had entered into a Memorandum of Understanding (MOU) with Morgan Asia on March 31, 2014, for a loan of Rs. 6,00,00,000 with an assured return of 24% p.a. The MOU was later amended on October 1, 2015. The corporate debtor made irregular payments after June 2017 and partially paid interest until 2018. Several meetings were held, and cheques issued by the corporate debtor were

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## Facts

Morgan Asia Ltd. (the applicant/financial creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Paramount Propbuild Pvt. Ltd. (the respondent/corporate debtor). The application was based on a default in repayment of a loan of Rs. 6,00,00,000 provided by Morgan Asia to Paramount Propbuild, secured by 13 apartments. The loan agreement was formalized through a Memorandum of Understanding (MOU) dated March 31, 2014, which included an assured return of 24% p.a. The MOU was later amended on October 1, 2015. Paramount Propbuild made assured return payments until 2017, but payments became irregular and partially paid until 2018. After 2018, several meetings were held, and cheques issued by Paramount Propbuild were dishonored. The

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

**Ratio:** The application under Section 7 of the IBC is maintainable if a default has occurred and

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**Reasoning:** The court considered the documents and submissions of both parties and found that the

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

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**Application:** The court applied the provisions of Section 7 of the IBC to the facts of the

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## Parties

- **Judges:** DEEPTI M…
- **Appellants:** Morgan Asi…
- **Respondents:** Paramount…

## Timeline

- **2014-03-31 — MOU Exec…**: Morgan Asia Ltd. and Paramount Propbuild Pvt. Ltd. entered into a Memorandum of…
- **2015-10-01 — MOU Amen…**: The MOU between Morgan Asia Ltd. and…

## 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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