# In the matter of Rashi Steel & Power Limited IA No. 78-CTB-2019 Connected with TP No. 197-CTB-2019 in Arising out of CP (IB) No.4707-MB-2018

> NCLT judgment dated 2020-03-02. Citation: TCN-2020-NCLT-01729. The case involves an application filed by Rashi Steel & Power Limited, the Corporate Debtor,…

- **Court:** NCLT
- **Order date:** 2 Mar 2020
- **Citation:** TCN-2020-NCLT-01729
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rashi-steel-power-limited-ia-no-78-ctb-2019-connected-with-tp-no-197-ctb-2019-in-71de2f48

## Summary

### Background

The case involves an application filed by Rashi Steel & Power Limited, the Corporate Debtor, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking dismissal of insolvency proceedings initiated by Punjab National Bank (PNB), the Financial Creditor, under Section 7 of the IBC, 2016. The proceedings were initiated due to alleged default in paying a financial debt of Rs. 141,66,79,953.83 as of 17.12.2018. The Corporate Debtor argued that the proceedings were initiated based on an RBI Circular that was later quashed by the Supreme Court. The Financial Creditor contended that the proceedings were initiated due to the Corporate Debtor's failure to repay debts and various deficiencies in its resolution plan, not solely based on the RBI Circular.

## Facts

Rashi Steel & Power Limited (Corporate Debtor) availed term loan and cash credit facilities from Punjab National Bank (PNB) (Financial Creditor) under sanction letters dated 24.12.2012 and 29.10.2013. The Corporate Debtor also received separate term loan and cash credit facilities from Allahabad Bank vide sanction letters dated 26.08.2014 and 12.01.2016. PNB and Allahabad Bank entered into a Working Capital Consortium Agreement. On 24.11.2016, the Corporate Debtor proposed restructuring to the Financial Creditor, including a request for a fresh term loan. During a consortium meeting on 28.11.2016, the request for an additional term loan was discussed, and PNB decided to appoint an agency for Techno Economic Viability (TEV) Study. The Corporate Debtor requested the

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the IBC, 2016 should be …

**Ratio:** The ratio is that even if the initial action was influenced by a circular that was later

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**Reasoning:** The court reasoned that the Financial Creditor's actions were not solely based on the RBI

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**Interpretation:** This issue involves interpreting the impact of the Supreme Court's decision on

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**Application:** The court applied this principle to the facts by finding that the Financial

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## Parties

- **Judges:** Sucharit…; Satya Ranjan…
- **Respondents:** Rashi Steel &…; Punjab National…
- **Advocates:** Manoj M…

## Timeline

- **2012-12-24 — Sanction…**: Punjab National Bank (PNB) issued a sanction letter for Term Loan Facility and Cash…
- **2013-10-29 — Sanction…**: Punjab National Bank (PNB) issued another sanction letter for Term Loan Facility and Cash…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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