# In the matter of SBZ AD Agency Private Limited C.P. No. IB-620(PB)-2017

> NCLT judgment dated 2018-04-20. Citation: TCN-2018-NCLT-01519. Reliance Commercial Finance Limited initiated a Corporate Insolvency Resolution Process (CIRP)…

- **Court:** NCLT
- **Order date:** 20 Apr 2018
- **Citation:** TCN-2018-NCLT-01519
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sbz-ad-agency-private-limited-cp-no-ib-620pb-2017-977c444e

## Summary

### Background

Reliance Commercial Finance Limited initiated a Corporate Insolvency Resolution Process (CIRP) against SBZ AD Agency Private Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. The debt was originally payable to Reliance Capital Finance Limited and was transferred to Reliance Commercial Finance Limited following a scheme of arrangement sanctioned by the Bombay High Court. The Financial Creditor claimed a default amount of Rs. 34,96,197 as of 10.11.2017, including overdues and penal interest, with a total foreclosure amount of Rs. 38,78,453.

## Facts

Reliance Commercial Finance Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against SBZ AD Agency Private Limited (Corporate Debtor). The debt was originally owed to Reliance Capital Finance Limited and transferred to Reliance Commercial Finance Limited following a scheme of arrangement approved by the Bombay High Court on 09.12.2016. The Corporate Debtor availed a loan of Rs. 62,50,000 from the Financial Creditor for machinery purchase, paying an advance of Rs. 12,50,000. The machinery was not delivered, leading to an understanding where the supplier agreed to pay Rs. 42,50,000 towards the loan. Cheques issued by the supplier bounced, but payments

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## Issues and analysis

### Issue 1: Whether the Financial Creditor has successfully demonstrated a case for triggering the Corporate …

**Ratio:** To trigger CIRP under Section 7 of the IBC, the Financial Creditor must satisfy the

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**Reasoning:** The NCLT considered the evidence presented by the Financial Creditor, including the loan

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**Interpretation:** Section 7 of the IBC allows a Financial Creditor to initiate CIRP against a

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**Application:** The NCLT applied the provisions of Section 7 to the facts of the case, finding

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## Parties

- **Judges:** M. M. K…; DEEPTI M…
- **Appellants:** Reliance Commercia…
- **Respondents:** SBZ AD Agency…
- **Advocates:** Amrita…; Shrayansh R…; +1 more

## Timeline

- **2016-12-09 — Bombay High Co…**: Bombay High Court passed an order sanctioning a scheme of arrangement between Reliance…
- **2017-07-27 — Legal No…**: The Financial Creditor sent a legal notice to the Corporate Debtor asking for payment of…

## 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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