# In the matter of Sarswati Sales Private Limited C.P. (IB) No. 231-KB-2019

> NCLT judgment dated 2019-06-24. Citation: TCN-2019-NCLT-02801. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 24 Jun 2019
- **Citation:** TCN-2019-NCLT-02801
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sarswati-sales-private-limited-cp-ib-no-231-kb-2019-7c319ac1

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by D K Jain Properties Private Limited (Financial Creditor) against Sarswati Sales Private Limited (Corporate Debtor). The Financial Creditor and Corporate Debtor entered into a loan agreement on March 27, 2018, for a financial assistance of Rs. 75,00,000/- for a period of 6 months with an interest rate of 12% p.a. compounded annually. The Corporate Debtor failed to repay the amount, leading to the Financial Creditor issuing a notice of demand on September 25, 2018. The Corporate Debtor requested an extension, which was partially granted. The Financial Creditor sent

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## Facts

D K Jain Properties Private Limited (Financial Creditor) and Sarswati Sales Private Limited (Corporate Debtor) entered into a loan agreement on March 27, 2018, where the Financial Creditor agreed to provide a financial assistance of Rs. 75,00,000/- to the Corporate Debtor for a period of 6 months. The loan carried an interest rate of 12% per annum, compounded annually. The agreement stipulated that any failure or delay in repayment would entitle the Financial Creditor to take legal steps to recover the loan amount along with interest. The Financial Creditor issued a notice of demand on September 25, 2018, to the Corporate Debtor, stating that the amount of Rs. 75,00,000/- along with interest had become due. The Corporate Debtor requested an extension of 30 days, which

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

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

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**Reasoning:** The Tribunal considered the submissions and documents presented by the Financial

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

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**Application:** The Financial Creditor demonstrated the existence of a debt through the loan

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** D K Jain Propertie…
- **Respondents:** Sarswati Sales…
- **Advocates:** Ravi A…; R. Sa…

## Timeline

- **2018-03-27 — Loan Agre…**: Financial Creditor and Corporate Debtor entered…
- **2018-09-25 — Notice of…**: Financial Creditor issued a notice…

## 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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