# In the matter of Sahil Alloys & Machine Tools Pvt. Ltd. CP (IB) No.363-Chd-Pb-2018

> NCLT judgment dated 2019-04-12. Citation: TCN-2019-NCLT-03925. The GATS Urban Co-operative Thrift and Credit Society Limited, the financial creditor, filed a…

- **Court:** NCLT
- **Order date:** 12 Apr 2019
- **Citation:** TCN-2019-NCLT-03925
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sahil-alloys-machine-tools-pvt-ltd-cp-ib-no363-chd-pb-2018-7a428f4e

## Summary

### Background

The GATS Urban Co-operative Thrift and Credit Society Limited, the financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Sahil Alloys & Machine Tools Pvt. Ltd., the corporate debtor. The financial creditor claimed a default of ₹13,33,931.06 as of 31.07.2018, stemming from a loan agreement where ₹10 lacs was disbursed out of a sanctioned amount of ₹15 lacs. The corporate debtor argued breach of contract, claiming only ₹10 lacs was disbursed against an agreed ₹15 lacs, leading to financial difficulties.

## Facts

The GATS Urban Co-operative Thrift and Credit Society Limited (Financial Creditor) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Sahil Alloys & Machine Tools Pvt. Ltd. (Corporate Debtor) for a default in repayment of a loan. The Financial Creditor sanctioned a loan of ₹15 lacs to the Corporate Debtor for a term of 24 months at 24% interest per annum, evidenced by a Loan Cum Hypothecation Agreement dated 22.03.2017. The purpose of the loan was to provide working capital. The Financial Creditor disbursed ₹3,00,000 on 22.03.2017 and a total of ₹7,00,000 in several tranches until 25.10.2017. The Financial Creditor claimed a default of ₹13,33,931.06 as of 31.07.2018, with the date of default being 01.12.2017. Loan recall

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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(5)(a) of the Insolvency and Bankruptcy Code, 2016, provides for the admission

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**Reasoning:** The Adjudicating Authority considered the arguments of both parties and examined the

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

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**Application:** In this case, the Adjudicating Authority found that a default had occurred, the

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## Parties

- **Judges:** M.K. Sh…; Pradeep R.…
- **Appellants:** The GATS Urban…
- **Respondents:** M/s. Sahil Alloys…
- **Advocates:** Jatin S…; Vishav Bharti…

## Timeline

- **2017-03-22 — Loan Cum Hypothecation…**: Loan Cum Hypothecation Agreement dated 22.03.2017 was executed between the financial…
- **2017-03-22 — First Tranche…**: First tranche of ₹3,00,000 was…

## 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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