# In the matter of Prism Industrial Complex Ltd. Company Petition (IB) No. 168-ALD-2017

> NCLT judgment dated 2020-01-29. Citation: TCN-2020-NCLT-02148. The case pertains to a petition filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 29 Jan 2020
- **Citation:** TCN-2020-NCLT-02148
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/prism-industrial-complex-ltd-company-petition-ib-no-168-ald-2017-a821d2e7

## Summary

### Background

The case pertains to a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy Code (Application to Adjudicating Authority) Rules, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Prism Industries Complex Ltd. The applicant, Mr. Shobhnath & Ors., claimed that the corporate debtor defaulted on debentures issued to them amounting to Rs. 81,34,000/-. The corporate debtor, in their counter-affidavit, stated their intention to refund the amount towards the maturity of the debentures and had initiated the process to sell some of their properties. The petition was initially dismissed but was later remitted to the Tribunal by the NCLAT.

## Facts

Mr. Shobhnath & Ors. filed a petition against Prism Industries Complex Ltd. under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP. The applicants claimed that the corporate debtor had issued debentures to them amounting to Rs. 81,34,000/- and defaulted on repayment. The corporate debtor had initially transferred the agreed amount for initial months but later stopped paying the monthly return. The corporate debtor also did not pay any amount on the redemption date. The corporate debtor, in their counter-affidavit, stated their intention to refund the amount by selling some of their properties. The petition was initially dismissed by the Tribunal on 05.07.2018, but the NCLAT set aside the order on 06.08.2019 and remitted the case

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## Issues and analysis

### Issue 1: Whether the petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, is …

**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 averments made in the petition, the

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

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**Application:** The adjudicating authority found that the applicant had established a default

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## Parties

- **Judges:** Rajesh Daya…
- **Appellants:** Shobh…
- **Respondents:** Prism Industrial…

## Timeline

- **2020-01-10 — Order Res…**: The order was reserved…
- **2020-01-29 — Order Del…**: The order was delivered…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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