# In the matter of Pulchand Exports Pvt. Ltd. C.P.(IB)-63-MB-2020

> NCLT judgment dated 2021-08-27. Citation: TCN-2021-NCLT-01265. PEC Limited, claiming to be a financial creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 27 Aug 2021
- **Citation:** TCN-2021-NCLT-01265
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/pulchand-exports-pvt-ltd-cpib-63-mb-2020-a614f9ee

## Summary

### Background

PEC Limited, claiming to be a financial creditor, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, against Phulchand Exports Pvt. Ltd., the corporate debtor, seeking to initiate Corporate Insolvency Resolution Process (CIRP). PEC Limited and Phulchand Exports Pvt. Ltd. were working together in the business of export of Iron ore since 2003-04. PEC provided interest bearing export financing to Phulchand Exports for procurement of iron ore to be exported to foreign buyers. Six contracts were entered into between PEC and Phulchand Exports for export financing. In October 2012, the Government of India imposed a ban on the export of Iron Ore based on the direction of the Hon'ble Supreme Court. The Corporate Debtor could not export the iron

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## Facts

PEC Limited (PEC), claiming to be a financial creditor, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, against Phulchand Exports Pvt. Ltd. (PEP), the corporate debtor, seeking to initiate Corporate Insolvency Resolution Process (CIRP). PEC and PEP were working together in the business of export of Iron ore since 2003-04. PEC provided interest bearing export financing to PEP for procurement of iron ore to be exported to foreign buyers. Six contracts were entered into between PEC and PEP for export financing, with a total sum of Rs.63.57 crores advanced by PEC. In October 2012, the Government of India imposed a ban on the export of Iron Ore based on the direction of the Hon'ble Supreme Court. PEP could not export the iron ore against

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## Issues and analysis

### Issue 1: Whether the petition under Section 7 of the …

**Ratio:** A petition under Section 7 of the IBC is maintainable only if the applicant is a

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**Reasoning:** The Tribunal found that PEC was not a financial creditor and the debt was not a financial

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The Tribunal held that the debt did not qualify as a financial debt and the

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## Parties

- **Judges:** H.V. Subb…; Chandra Bha…
- **Appellants:** PEC Lim…
- **Respondents:** Phulchand Exports…
- **Advocates:** Premlal Kr…; Leona Fu…; +3 more

## Timeline

- **2003-01-01 — Business Rela…**: PEC Limited and Phulchand Exports Pvt. Ltd. started working together in the business of…
- **2010-11-02 — Contract Ex…**: PEC/NET/10/2010-11…

## 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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