# In the matter of P.V.K. Engineers Private Limited CP (IB) No. 672-7-HDB-2019

> NCLT judgment dated 2020-09-21. Citation: TCN-2020-NCLT-00569. Abhirama Steels Limited, the Financial Creditor, filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 21 Sept 2020
- **Citation:** TCN-2020-NCLT-00569
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/pvk-engineers-private-limited-cp-ib-no-672-7-hdb-2019-2471b97e

## Summary

### Background

Abhirama Steels Limited, the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against PVK Engineers Private Limited, the Corporate Debtor, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The Financial Creditor had approached the Corporate Debtor to erect a Cut and Bend plant at its site. A contract was entered into on November 30, 2015, for a turnkey project with a contract value of Rs. 25,75,00,000. The Financial Creditor advanced Rs. 22,20,02,008 to the Corporate Debtor by May 11, 2016. However, the Corporate Debtor failed to carry out any work. The Corporate Debtor proposed converting the advance into a loan, and a loan agreement was entered into on October 10, 2017, for repayment in 12 EMIs from

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## Facts

Abhirama Steels Limited (Financial Creditor) and PVK Engineers Private Limited (Corporate Debtor) entered into a contract on November 30, 2015, for the erection of a Cut and Bend plant at the Corporate Debtor's site in Chityal, Telangana, for Rs. 25,75,00,000. The Financial Creditor advanced Rs. 22,20,02,008 to the Corporate Debtor by May 11, 2016. The Corporate Debtor failed to execute any work. On October 10, 2017, both parties entered into a loan agreement to convert the advance into a loan repayable in 12 EMIs from November 2017 to October 2018. The Corporate Debtor failed to honor the loan agreement and did not pay any installments. The Financial Creditor issued a final notice on December 5, 2018, which was not replied to. The total claim was Rs. 25,64,12,319,

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## Issues and analysis

### Issue 1: Whether the advance of Rs. 22,20,02,008 qualifies as a 'financial debt' under the IBC 2016, …

**Ratio:** The expression 'if any' as a suffix to 'interest' under Section 5(8) of the IBC makes it

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**Reasoning:** The Adjudicating Authority relied on the NCLAT's judgment in Shailesh Sangani v. Joel

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**Interpretation:** Section 5(8) of the IBC does not mandate that a financial debt must necessarily

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**Application:** In this case, the advance was disbursed for the construction of a Cut and Bend

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## Parties

- **Judges:** K. Anantha…; BINOD KUMAR…
- **Appellants:** Abhirama Steels…
- **Respondents:** PVK Engineers…
- **Advocates:** Sourabh A…; G. Sri…

## Timeline

- **2015-11-30 — Contract Ex…**: Financial Creditor and Corporate Debtor entered into a contract for a turnkey project of…
- **2016-05-11 — Advance P…**: Financial Creditor paid a cumulative advance of…

## 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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