# In the matter of Right Engineers and Equipment India Private Limited C.P.(IB) No. 320-BB-2019

> NCLT judgment dated 2019-10-29. Citation: TCN-2019-NCLT-00791. M/s. Sir M. Visvesvaraya Co-operative Bank Limited filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 29 Oct 2019
- **Citation:** TCN-2019-NCLT-00791
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/right-engineers-and-equipment-india-private-limited-cpib-no-320-bb-2019-deacf1a7

## Summary

### Background

M/s. Sir M. Visvesvaraya Co-operative Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Right Engineers and Equipment India Private Limited, citing a default of Rs. 14,47,89,162 as of June 30, 2019. The financial creditor had sanctioned financial assistance to the corporate debtor, which the corporate debtor failed to repay despite notices. The corporate debtor acknowledged the debt and default but attributed it to economic sluggishness and working capital shortages.

## Facts

M/s. Sir M. Visvesvaraya Co-operative Bank Limited (Financial Creditor) filed an application under Section 7 of the IBC against M/s. Right Engineers and Equipment India Private Limited (Corporate Debtor) due to a default of Rs. 14,47,89,162 as of June 30, 2019. The Financial Creditor had sanctioned a term loan of Rs. 10,40,00,000 and a secured cash credit of Rs. 4,40,00,000 to the Corporate Debtor in October 2016. The Corporate Debtor offered security in the form of plant and machinery, furniture, fixtures, and mortgage of factory land and building. The directors of the Corporate Debtor also offered personal guarantees. The Corporate Debtor defaulted on repayments, leading the Financial Creditor to issue notices. The Corporate Debtor acknowledged the debt but

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## Issues and analysis

### Issue 1: Whether the requirements for initiating Corporate Insolvency Resolution Process (CIRP) under …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a corporate

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**Reasoning:** The Adjudicating Authority relied on the precedents set by the NCLAT and the Supreme

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

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**Application:** In this case, the Financial Creditor has demonstrated the existence of a

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** M/s. Sir M.…
- **Respondents:** M/s.Right…

## Timeline

- **2016-10-17 — Loan Sanc…**: The Financial Creditor sanctioned a term loan of Rs. 10,40,00,000 and a secured cash…
- **2018-08-18 — Notice I…**: The Financial Creditor issued a notice to the Corporate Debtor to repay the loan…

## 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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