# In the matter of Shambhu Mahadev Sugar & Allied Industries Limited CP No. 3062-IBC-NCLT-MB-MAH-2018

> NCLT judgment dated 2019-01-04. Citation: TCN-2019-NCLT-05325. Abhyudaya Co-operative Bank Limited, the Financial Creditor, filed an application under Section…

- **Court:** NCLT
- **Order date:** 4 Jan 2019
- **Citation:** TCN-2019-NCLT-05325
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shambhu-mahadev-sugar-allied-industries-limited-cp-no-3062-ibc-nclt-mb-mah-2018-a7b0938d

## Summary

### Background

Abhyudaya Co-operative Bank Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Shambhu Mahadev Sugar & Allied Industries Limited, the Corporate Debtor, due to default in repayment of a short-term corporate loan. The loan was intended to meet the Corporate Debtor's working capital requirements. The Financial Creditor claimed a default of ₹15,63,18,392/- against a principal amount of ₹15,00,06,393/- and interest of ₹63,11,999/- as on 28.02.2018.

## Facts

Abhyudaya Co-operative Bank Limited (Financial Creditor) granted a short-term corporate loan of ₹15,00,00,000/- to Shambhu Mahadev Sugar & Allied Industries Limited (Corporate Debtor) on 10.07.2017 to meet its working capital requirements. An agreement for hypothecation of plant and machinery and a mortgage deed for land and structure were executed. The Corporate Debtor defaulted in repayment, leading the Financial Creditor to declare the loan account as a Non-Performing Asset (NPA) on 28.02.2018. The Financial Creditor recalled the dues and initiated arbitration proceedings for recovery of ₹16,01,29,861/- as on 30.04.2018. The Corporate Debtor failed to repay the debt or respond to the Financial Creditor's notices. The Financial Creditor then filed an application

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## Issues and analysis

### Issue 1: Whether the debt in question qualifies as a 'Financial Debt' under Section 5(8) of the Insolvency …

**Ratio:** Section 5(8) of the Insolvency and

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**Reasoning:** The Adjudicating Authority considered the facts and circumstances and concluded that the

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**Interpretation:** The interpretation of 'Financial Debt' under Section 5(8) includes a debt along

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**Application:** The Adjudicating Authority applied the definition of 'Financial Debt' to the

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** Abhyudaya…
- **Respondents:** Shambhu Mahadev…

## Timeline

- **2017-07-03 — Loan San…**: Loan sanctioned to…
- **2017-07-10 — Loan Agre…**: Short Term Corporate Loan agreement entered into between Financial Creditor and Corporate…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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