# In the matter of S. A. Gold Ispat Pvt. Ltd. CP (IB) No. 275-CHD-J&K-2018

> NCLT judgment dated 2020-01-10. Citation: TCN-2020-NCLT-02395. The Jammu & Kashmir Bank Ltd. filed a petition under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 10 Jan 2020
- **Citation:** TCN-2020-NCLT-02395
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/s-a-gold-ispat-pvt-ltd-cp-ib-no-275-chd-jk-2018-0f011581

## Summary

### Background

The Jammu & Kashmir Bank Ltd. filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against S A Gold Ispat Pvt. Ltd., the corporate debtor, due to default in repayment of a working capital facility. The bank had sanctioned various credit facilities to the corporate debtor, which later became irregular, leading to the account being declared as NPA. The bank issued recall notices and a demand notice under Section 13(2) of the SARFAESI Act. The corporate debtor contended that there was a pre-existing dispute and a pending OTS proposal, which should bar the initiation of CIRP.

## Facts

Jammu & Kashmir Bank Ltd. (the petitioner/financial creditor) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against S A Gold Ispat Pvt. Ltd. (the respondent/corporate debtor) for initiation of Corporate Insolvency Resolution Process (CIRP). The corporate debtor had approached the bank for a working capital facility of ₹3.20 Crores, which was sanctioned on 08.05.2009. The credit facility was later enhanced to ₹6 Crores on 01.10.2010 and further to ₹12 Crores. Due to devastating floods in Kashmir in September 2014, a rehabilitation/restructuring scheme was introduced, and the corporate debtor availed a Working Capital Facility of ₹9 Crores. The loan accounts became irregular, and the bank declared the account as NPA on 31.03.2016. The

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiation …

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

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**Reasoning:** The court relied on the Supreme Court's judgment in Innoventive Industries Ltd. Versus

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**Interpretation:** Section 7 is interpreted to mean that if a financial debt exists, a default has

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**Application:** The court found that the financial creditor, Jammu & Kashmir Bank Ltd., had

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## Parties

- **Judges:** Ajay Kumar…; Pradeep R.…
- **Appellants:** Jammu & Kashmir…
- **Respondents:** S A Gold Ispat…

## Timeline

- **2009-05-08 — Sanction of Working…**: The petitioner-financial creditor sanctioned a working capital facility of ₹3.20 Crores…
- **2010-10-01 — Enhancement of Credit…**: The aforesaid credit facility was…

## 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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