# In the matter of Rama Krishna Knitters Private Ltd. CP (IB) No. 286-Chd-Pb-2018

> NCLT judgment dated 2019-02-13. Citation: TCN-2019-NCLT-04856. Punjab National Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 13 Feb 2019
- **Citation:** TCN-2019-NCLT-04856
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rama-krishna-knitters-private-ltd-cp-ib-no-286-chd-pb-2018-0f7dea27

## Summary

### Background

Punjab National Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Rama Krishna Knitters Private Ltd. The bank claimed that the corporate debtor had defaulted on its loan obligations. The loan facilities were initially granted on 02.08.2010 and enhanced over time, with the latest documents executed in March 2015. The corporate debtor's account was classified as NPA on 31.03.2016 due to the failure to pay interest and installments regularly.

## Facts

Punjab National Bank (PNB) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Rama Krishna Knitters Private Ltd. PNB, incorporated on 31.03.1970, claimed to be a financial creditor. The corporate debtor, Rama Krishna Knitters Private Ltd., was incorporated on 15.02.2007. PNB originally granted a loan to the corporate debtor on 02.08.2010, amounting to ₹16.50 crores for packing credit and ₹23.50 crores for other facilities, along with a term loan of ₹4.50 crores, totaling ₹44.50 crores. The loan facilities were enhanced over time, reaching ₹136.34 crores by March 2015. The corporate debtor failed to pay interest and installments regularly, leading to the account being classified as NPA on 31.03.2016. PNB issued a notice under Section

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## Issues and analysis

### Issue 1: Whether the petition filed by Punjab National Bank under Section 7 of the Insolvency and Bankruptcy …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The court observed that the financial creditor, Punjab National Bank, had filed an

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

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**Application:** The court found that Punjab National Bank had submitted sufficient evidence to

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## Parties

- **Judges:** R.P.Nag…; Pradeep R.…
- **Appellants:** Punjab National…
- **Respondents:** M/s Rama Krishna…

## Timeline

- **2007-02-15 — Incorporation of…**: Rama Krishna Knitters Private Ltd. was incorporated as a company under the Companies Act,…
- **2010-08-02 — Original Loa…**: Punjab National Bank originally granted a loan of ₹44.50 crores to Rama Krishna Knitters…

## 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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