# 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-04873. 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-04873
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rama-krishna-knitters-private-ltd-cp-ib-no-286-chd-pb-2018-2b50b705

## 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 corporate debtor. The bank claimed that the corporate debtor had defaulted on loan repayments. The bank had extended various loan facilities to the corporate debtor, which were enhanced over time. The corporate debtor had also created equitable mortgages of its properties to secure the loan. The account was classified as NPA due to the debtor's 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, to initiate the Corporate Insolvency Resolution Process (CIRP) against Rama Krishna Knitters Private Ltd. (Corporate Debtor). PNB, incorporated on 31.03.1970, claimed to be a financial creditor. The Corporate Debtor was incorporated on 15.02.2007 under the Companies Act, 1956, with a registered office in Ludhiana. The Corporate Debtor was originally granted a loan on 02.08.2010, amounting to ₹16.50 crores for packing credit and ₹23.50 crores for FOBP/FOUBP/FABC/FOBNLC/FOUBNLC, 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 passed a resolution on

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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 respondent had not denied the execution of the documents of

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

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**Application:** The court found that Punjab National Bank, as a financial creditor, had

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## Parties

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

## Timeline

- **1970-03-31 — Incorporation of Punjab…**: Punjab National Bank incorporated under the Banking Companies (Acquisition and Transfer…
- **2007-02-15 — Incorporation of Rama Krishna Knitters Private…**: Rama Krishna Knitters Private Ltd.…

## 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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