# In the matter of Precision Fasteners Limited  C.P. No. 1339-I&BP-2017

> NCLT judgment dated 2017-11-07. Citation: TCN-2017-NCLT-00238. Asset Reconstruction Company (India) Ltd. (ARCIL), acting as a Trustee of ARCIL - Precision…

- **Court:** NCLT
- **Order date:** 7 Nov 2017
- **Citation:** TCN-2017-NCLT-00238
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/precision-fasteners-limited-cp-no-1339-ibp-2017-6c2a0666

## Summary

### Background

Asset Reconstruction Company (India) Ltd. (ARCIL), acting as a Trustee of ARCIL - Precision Fasteners Ltd. - Trust, filed a petition to initiate Corporate Insolvency Resolution Process (CIRP) against Precision Fasteners Ltd. (PFL), the Corporate Debtor. ARCIL alleged that PFL defaulted on a payment of ₹129,34,66,8977 as of 2017-07-13, with the initial default occurring on 2002-01-01. The petition was filed under Section 7 of the Insolvency and Bankruptcy Code (I&B Code), 2016, read with Rule 4 of the Insolvency & Bankruptcy (Adjudicating Authority) Rules, 2016. ARCIL had acquired financial assets of PFL from Industrial Development Bank of India (IDBI) for ₹4.64 crores via an Assignment Agreement dated 2003-12-30.

## Facts

Asset Reconstruction Company (India) Ltd. (ARCIL) filed a petition against Precision Fasteners Ltd. (PFL) to initiate CIRP, claiming a default of ₹129,34,66,8977 as of 2017-07-13, with the initial default on 2002-01-01. ARCIL acquired PFL's financial assets from IDBI through an Assignment Agreement dated 2003-12-30 for ₹4.64 crores. The agreement involved assets mortgaged with IDBI for a working capital facility. PFL raised objections regarding ARCIL's claim, the applicability of the Bankers Book Evidence Act, and limitation. The AAIFR had previously rejected an appeal filed by PFL. The NCLT considered the documents submitted by ARCIL, including the Assignment Agreement, deeds of hypothecation, and other relevant documents. The certificate u/s.41 of the Bombay Stamp

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## Issues and analysis

### Issue 1: Whether the application filed by ARCIL under Section 7 …

**Ratio:** Section 7 of the I&B Code allows a financial creditor to initiate CIRP against a

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**Reasoning:** The NCLT found that the Corporate Debtor had defaulted in making payments and that ARCIL

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**Interpretation:** Section 7 of the I&B Code provides a mechanism for financial creditors to

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**Application:** The NCLT applied Section 7 to the facts of the case, finding that ARCIL had

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## Parties

- **Judges:** B.S.V. Prakash…; V. Nallasen…
- **Appellants:** Asset Reconstructi…
- **Respondents:** Precision…

## Timeline

- **2002-01-01 — Default…**: Precision Fasteners Limited…
- **2003-12-30 — Assignment Ag…**: ARCIL acquired financial assets of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(1) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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