# In the matter of RL Logistics Private Limited CP-1226-IB-2018

> NCLT judgment dated 2019-02-27. Citation: TCN-2019-NCLT-04658. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 27 Feb 2019
- **Citation:** TCN-2019-NCLT-04658
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rl-logistics-private-limited-cp-1226-ib-2018-0f4036ab

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by M/s. V. S. Enterprises (Financial Creditor) against M/s. RL Logistics Private Limited (Corporate Debtor). The Financial Creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare a moratorium, and appoint an Interim Resolution Professional (IRP). The Corporate Debtor failed to repay outstanding dues of Rs.8,31,068/-, which included interest as on 14.05.2018. The Corporate Debtor was proceeded ex parte due to lack of representation despite receiving notice.

## Facts

M/s. V. S. Enterprises (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. RL Logistics Private Limited (Corporate Debtor) due to a default in loan repayment. The Corporate Debtor's Board of Directors decided on 2018-02-11 to borrow Rs. 15 Lakhs from the Financial Creditor for five months. A Loan Agreement was entered into on 2018-02-13, with the Financial Creditor advancing the loan. To secure the loan, Demand Promissory Notes were issued, and a Deed of Personal Guarantee was provided by Mr. S. Rajagopalan. The Corporate Debtor made some repayments, totaling Rs. 7 Lakhs. However, a cheque for Rs. 9 Lakhs issued by the Corporate Debtor bounced. The Financial Creditor sent a notice on 2018-07-06 demanding

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor 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 court found that the Financial Creditor had fulfilled all the requirements of law,

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

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**Application:** The court applied Section 7 to the facts of the case, noting that the Financial

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## Parties

- **Judges:** CH. MOHD SHARIEF…
- **Appellants:** M/s. V. S.…
- **Respondents:** M/s. R L Logistics…
- **Advocates:** R. Nilesh…

## Timeline

- **2018-02-11 — Board Me…**: Corporate Debtor's Board of Directors decided to borrow Rs. 15 Lakhs from the Financial…
- **2018-02-13 — Loan Agre…**: Loan Agreement entered into between the…

## 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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