# In the matter of Parsoli Motor Works Private Limited I.A. No. 300-2018 in-with C.P. (I.B) No.161-7-NCLT-AHM-2017

> NCLT judgment dated 2020-06-04. Citation: TCN-2020-NCLT-01242. BMW India Financial Services Private Limited filed an I.B. Petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 4 Jun 2020
- **Citation:** TCN-2020-NCLT-01242
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/parsoli-motor-works-private-limited-ia-no-300-2018-in-with-cp-ib-no161-7-nclt-ah-ad8159e7

## Summary

### Background

BMW India Financial Services Private Limited filed an I.B. Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Parsoli Motor Works Private Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The petition was filed due to the Corporate Debtor's default in repaying financial facilities/debt amounting to Rs. 58,10,00,000/-. The Financial Creditor had granted various financial facilities to the Corporate Debtor, including floorplan financing, spare part financing, and working capital demand credit facility. The Corporate Debtor defaulted on various dates commencing from 10.04.2016 onwards. The Financial Creditor issued show cause notices and engaged in communications with the Corporate Debtor to recover the outstanding

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## Facts

BMW India Financial Services Private Limited (Financial Creditor) extended various financial facilities to Parsoli Motor Works Private Limited (Corporate Debtor), including floorplan financing, spare part financing, and working capital demand credit facility. The total financial facility granted was INR 58,10,00,000/-, with an outstanding utilization of INR 51,03,86,650.35 as of 31 October 2017. The Corporate Debtor defaulted in making repayments, with defaults occurring on various dates commencing from 10.04.2016 onwards. The aggregate amount in default as of 31 October 2017 was INR 54,48,54,249.97, comprising principal and interest. The Corporate Debtor sold vehicles on a 'Sale Out of Trust' basis without making repayments to the Financial Creditor. The Financial

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in making repayment of financial facilities/debt to the …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The Adjudicating Authority considered the statement of accounts and CIBIL reports

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**Interpretation:** Section 7 of the IBC provides the mechanism for a financial creditor to

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**Application:** The Adjudicating Authority found that the Corporate Debtor had defaulted in

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## Parties

- **Judges:** Harihar Prakash…; Prasanta Kumar…
- **Appellants:** BMW India…
- **Respondents:** Parsoli Motor…

## Timeline

- **2016-04-10 — Commencement o…**: The Corporate Debtor started defaulting…
- **2017-10-31 — Outstanding…**: The aggregate amount in default as of 31…

## 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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