# In the matter of RG Buildestate Private Limited CP No. (IB)-262-7-JPR-2019

> NCLT judgment dated 2020-01-30. Citation: TCN-2020-NCLT-02127. S J Services Private Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 30 Jan 2020
- **Citation:** TCN-2020-NCLT-02127
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rg-buildestate-private-limited-cp-no-ib-262-7-jpr-2019-67417ae7

## Summary

### Background

S J Services Private Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against RG Buildestate Private Limited, claiming to be a Financial Creditor. The application seeks initiation of the Corporate Insolvency Resolution Process (CIRP) due to default in repayment of a loan amount. S J Services claims that RG Buildestate defaulted on a term loan facility of Rs. 1,00,00,000 availed in 2014, with an agreement for a penal interest rate of 3% per month on outstanding dues. The respondent, RG Buildestate, admits to availing the loan but claims to have made regular interest payments until 12.10.2015, followed by a payment of Rs. 75,000 in 2018. Cheques issued for interest payments in October 2015 were dishonored. The applicant also

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## Facts

S J Services Private Limited (the Applicant) claimed to be a Financial Creditor of RG Buildestate Private Limited (the Corporate Debtor). The Applicant filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to default in repayment of a loan. The Corporate Debtor availed a Term Loan Facility of Rs. 1,00,00,000 in 2014, executing a Term Loan Agreement dated 20.11.2014 with an interest rate of 3% per month. The agreement allowed the Applicant to charge a penal interest rate of 3% per month for delays in repayment. The Corporate Debtor was regular in interest payments until 12.10.2015. Cheques issued for interest payments on 13.10.2015 and

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## Issues and analysis

### Issue 1: Whether the application filed by S J Services Private Limited under Section 7 of the Insolvency and …

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

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**Reasoning:** The tribunal noted that the applicant, S J Services Private Limited, is a financial

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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 tribunal found that the applicant met the requirements of Section 7 of the

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## Parties

- **Judges:** P.S.N. P…; RaghuNa…
- **Appellants:** S J Services…
- **Respondents:** R. G. BUILDESTATE…

## Timeline

- **2014-01-01 — Term Loan Facility…**: RG Buildestate Private Limited availed a Term Loan Facility of Rs. 1,00,00,000 from S J…
- **2014-11-20 — Term Loan Agreement…**: RG Buildestate Private Limited executed a Term Loan Agreement with S J Services Private…

## 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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