# 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-02399. 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-02399
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/s-a-gold-ispat-pvt-ltd-cp-ib-no-275-chd-jk-2018-c60adef6

## 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. The petition was filed due to the corporate debtor's failure to repay its outstanding dues, which led to the account being declared as NPA. The financial creditor had sanctioned working capital facilities to the corporate debtor, which were later enhanced. Due to devastating floods in Kashmir valley in September 2014, the business suffered huge damage, leading to a rehabilitation/restructuring scheme. Despite this, the loan accounts became irregular, and the corporate debtor failed to regularize them, leading to the filing of the petition.

## Facts

Jammu & Kashmir Bank Ltd. (the 'petitioner' or 'financial creditor') filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process ('CIRP') against S A Gold Ispat Pvt. Ltd. (the 'respondent' or 'corporate debtor'). The financial creditor had extended working capital facilities to the corporate debtor, initially amounting to ₹3.20 Crores, which were subsequently enhanced to ₹6 Crores and then to ₹12 Crores. Due to devastating floods in Kashmir in September 2014, the corporate debtor availed a Working Capital Facility of ₹9 Crores under a rehabilitation/restructuring scheme. The loan accounts of the corporate debtor became irregular, and the account was declared as NPA on 31.03.2016. The total amount

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## Issues and analysis

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

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

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**Reasoning:** The court reasoned that the financial creditor had provided sufficient evidence of

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**Interpretation:** Section 7 of the IBC is interpreted to mean that if a financial creditor

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**Application:** In this case, the financial creditor, Jammu & Kashmir Bank Ltd.,

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## Parties

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

## Timeline

- **2009-05-08 — Sanction…**: Working capital facility sanctioned in…
- **2010-10-01 — Credit Facility…**: Credit facility…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(12) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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