# In the matter of Precision Engineers & Febricators Pvt. Ltd.

> NCLT judgment dated 2017-05-19. Citation: TCN-2017-NCLT-00856. The case involves a Company Petition in Insolvency proceeding initiated against Precision…

- **Court:** NCLT
- **Order date:** 19 May 2017
- **Citation:** TCN-2017-NCLT-00856
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/precision-engineers-febricators-pvt-ltd-18c4cfac

## Summary

### Background

The case involves a Company Petition in Insolvency proceeding initiated against Precision Engineers & Fabricators Pvt. Ltd. The Operational Debtor and Operational Creditor jointly requested a stay on the proceedings, claiming an amicable settlement. The Corporate Debtor purportedly handed over a draft of Rs. 1,00,000 and post-dated cheques. An interim order was issued directing the IRP not to proceed further until 18/05/2017. Subsequently, Axis Bank Ltd., a financial creditor, moved C.A. (IB) No.213/KB/2017, stating that the Corporate Debtor had defaulted on repayments and that the credit facilities had been classified as NPA w.e.f. 17/11/2016. Axis Bank claimed Rs. 33,95,90,543.07 and argued that the insolvency process could not be recalled at the request of the

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## Facts

Precision Engineers & Fabricators Pvt. Ltd. faced an insolvency petition (C.P.No.173/2017). Initially, the Operational Debtor and Operational Creditor sought a stay based on an alleged amicable settlement, presenting a draft of Rs. 1,00,000 and post-dated cheques. The court issued an interim stay order on 21/04/2017, directing the IRP not to proceed until 18/05/2017. However, Axis Bank Ltd. (a financial creditor) intervened, filing C.A. (IB) No.213/KB/2017, claiming Rs. 33,95,90,543.07 due to defaults and NPA classification (w.e.f. 17/11/2016). Axis Bank argued that the insolvency process could not be recalled based on the Operational Creditor/Debtor's request. The court learned that notice of the insolvency process had been published, contradicting earlier

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## Issues and analysis

### Issue 1: Whether the insolvency proceedings can be stayed solely based on a compromise between the …

**Ratio:** Insolvency proceedings cannot be stayed solely on the basis of a compromise between the

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**Reasoning:** The court reasoned that the interests of all creditors, including financial creditors,

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**Interpretation:** This interpretation emphasizes the importance of protecting the interests of

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**Application:** In this case, the court applied this principle by recalling its earlier order

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## Parties

- **Judges:** Vijai Prata…; S. VIJAYARA…
- **Respondents:** Precision…; Jishnce Cho…

## Timeline

- **2016-11-17 — NPA Classif…**: Credit facilities given to the Corporate…
- **2017-04-04 — Order Pa…**: I.A.No. 171/2017 for recalling/setting…

## Legal provisions

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

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