# In the matter of Sachdev and Sons Rice Mills Limited CP (IB) No. 341-Chd-Pb-2018

> NCLT judgment dated 2019-07-29. Citation: TCN-2019-NCLT-02231. Kotak Mahindra Bank Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 29 Jul 2019
- **Citation:** TCN-2019-NCLT-02231
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sachdev-and-sons-rice-mills-limited-cp-ib-no-341-chd-pb-2018-aea8e865

## Summary

### Background

Kotak Mahindra Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Sachdeva and Sons Rice Mills Limited for initiation of Corporate Insolvency Resolution Process (CIRP). The application was based on the corporate debtor's default in repaying credit facilities granted initially by Bank of Punjab Limited, which later merged with Centurion Bank of Punjab Limited (CBOP), and subsequently assigned the debt to Kotak Mahindra Bank Limited. The corporate debtor had various credit facilities sanctioned and restructured over time, including fund-based and non-fund-based facilities, and a bank guarantee. The account was classified as NPA on 31.12.2004. Kotak Mahindra Bank initiated the CIRP process after the assignment of debt.

## Facts

Kotak Mahindra Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Sachdeva and Sons Rice Mills Limited. The corporate debtor was granted credit facilities by Bank of Punjab Limited, which later merged with Centurion Bank of Punjab Limited (CBOP). These facilities included fund-based and non-fund-based limits, and a bank guarantee. The corporate debtor defaulted on the bank guarantee, leading to a payment by Bank of Punjab Limited. The credit facilities were restructured multiple times. The overall limit was fixed at ₹35 crores. The Board of Directors of the Corporate Debtor passed resolutions authorizing the acts and deeds performed by the company in its dealings with Bank of Punjab Limited. The account was classified

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## Issues and analysis

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

**Ratio:** Article 62 (Part V of First Division-Suits) of Limitation Act 1963 gives the limitation

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**Reasoning:** The court found that the proceedings under SARFAESI 2002 were initiated well within the

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**Interpretation:** The limitation period for debts secured by mortgage is 12 years from the date

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**Application:** The court applied the 12-year limitation period to the facts of the case,

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## Parties

- **Judges:** M.K. Sh…; Pradeep R.…
- **Appellants:** Kotak Mahindra…
- **Respondents:** Sachdeva And Sons…

## Timeline

- **1996-05-21 — Credit Facility…**: Bank of Punjab Limited sanctioned credit…
- **2000-01-29 — Bank Guarantee…**: Bank of Punjab Limited sanctioned a…

## 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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