# In the matter of S3 Electrical & Electronics Pvt. Ltd. (IB)-206(ND)2019

> NCLT judgment dated 2019-04-03. Citation: TCN-2019-NCLT-04167. The petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking…

- **Court:** NCLT
- **Order date:** 3 Apr 2019
- **Citation:** TCN-2019-NCLT-04167
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/s3-electrical-electronics-pvt-ltd-ib-206nd2019-956ad38a

## Summary

### Background

The petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Resolution Process against the Respondent/Corporate Debtor due to their inability to liquidate the financial debt. The Financial Creditor provided financial assistance of Rs. 35 lakhs to the Corporate Debtor via two cheques dated 23.03.2014 under two agreements: Rs. 20 Lakhs as an unsecured loan and Rs. 15 lakhs under a Share Purchase Agreement. The agreements were executed on 28.03.2014. The Corporate Debtor defaulted on both counts, failing to allot shares or return the principal amount with interest. The Corporate Debtor made partial payments totaling Rs. 3 lakhs between October 2015 and November 2016. In March 2017, an agreement was made for the

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## Facts

Mr. Neeraj Pandita, the Financial Creditor, provided financial assistance of Rs. 35 lakhs to S3 Electrical & Electronics Pvt. Ltd., the Corporate Debtor, through two cheques dated 23.03.2014. The amounts were given under two agreements: Rs. 20 lakhs as an unsecured loan with 14% interest and Rs. 15 lakhs under a Share Purchase Agreement for 1.8% equity. The agreements were executed on 28.03.2014. The Corporate Debtor defaulted on both agreements, failing to allot shares or repay the loan with interest. The Corporate Debtor made partial payments of Rs. 3 lakhs between October 2015 and November 2016. In March 2017, a repayment agreement was made for the remaining Rs. 24 lakhs in monthly installments, but cheques were dishonored after 10.03.2018. A complaint under

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## Issues and analysis

### Issue 1: Whether the petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, should be …

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

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**Reasoning:** The Corporate Debtor defaulted on its financial obligations to the Financial Creditor.

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

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**Application:** Given the Corporate Debtor's default and the uncontroverted evidence presented

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## Parties

- **Judges:** Ina Mal…; SHRI. DR. V.K.…
- **Appellants:** Neeraj Pa…
- **Respondents:** S3 Electrical &…

## Timeline

- **2014-03-23 — Financial Ass…**: Financial Creditor provided Rs. 35 lakhs…
- **2014-03-28 — Agreements E…**: Agreements for unsecured loan and…

## 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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