# In the matter of Parikh Fabrics Private Limited CP(IB)No.12-10-HDB-2019

> NCLT judgment dated 2019-02-08. Citation: TCN-2019-NCLT-04922. The case involves a petition filed by Parikh Fabrics Private Limited, the Corporate Debtor,…

- **Court:** NCLT
- **Order date:** 8 Feb 2019
- **Citation:** TCN-2019-NCLT-04922
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/parikh-fabrics-private-limited-cpibno12-10-hdb-2019-95e212e5

## Summary

### Background

The case involves a petition filed by Parikh Fabrics Private Limited, the Corporate Debtor, under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate a Corporate Insolvency Resolution Process (CIRP). The Corporate Debtor defaulted on its financial obligations to its Secured Financial Creditors, namely, State Bank of India and Punjab National Bank. The Corporate Debtor was incorporated on June 4, 2002, and is a 100% Export Oriented Unit (EOU) engaged in the manufacture of socks. After establishing a successful track record, the Corporate Debtor embarked on expansion of its manufacturing facilities, but due to delay in disbursement of funds by Banks, the expansion project ended up with Time Overrun and Cost Overrun, leading to delayed arrival of

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## Facts

Parikh Fabrics Private Limited, the Corporate Debtor, filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016, to initiate a Corporate Insolvency Resolution Process (CIRP) due to its inability to meet its financial obligations to its Secured Financial Creditors, State Bank of India and Punjab National Bank. The Corporate Debtor, incorporated on June 4, 2002, is a 100% Export Oriented Unit (EOU) manufacturing socks. After initial success, the Corporate Debtor embarked on an expansion project, which was hampered by delays in fund disbursement by banks, leading to time and cost overruns. This resulted in delayed arrival of machinery and subsequent cancellation of orders. Economic slowdown in Europe and the USA, increased raw material costs (cotton

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor, Parikh Fabrics Private Limited, meets the requirements for initiating …

**Ratio:** Section 10 of the Insolvency and Bankruptcy Code, 2016 allows a corporate debtor to

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**Reasoning:** The court considered the documents filed by the Corporate Debtor and the submissions of

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**Interpretation:** Section 10 of the IBC provides an avenue for corporate debtors facing financial

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**Application:** The court applied the provisions of Section 10 of the IBC to the facts of the

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## Parties

- **Judges:** K. Anantha…
- **Respondents:** Parikh Fabrics…; State Bank of…

## Timeline

- **2002-06-04 — Incorporation of…**: Parikh Fabrics Private Limited was incorporated in the then State of Andhra Pradesh (now…
- **2013-01-01 — Accounts Classified as…**: The Corporate Debtor's accounts were classified as 'Non-Performing Assets' (NPA) during…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 11 — Persons not entitled to make application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-11)

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