# In the matter of Shamken Cotsyn Limited Company Petition (IB)No. 132-ALD-2017

> NCLT judgment dated 2018-05-29. Citation: TCN-2018-NCLT-01360. The case involves a Company Petition (IB) No. 132/ALD/2017 filed under Section 7 of the…

- **Court:** NCLT
- **Order date:** 29 May 2018
- **Citation:** TCN-2018-NCLT-01360
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shamken-cotsyn-limited-company-petition-ibno-132-ald-2017-e77d6aef

## Summary

### Background

The case involves a Company Petition (IB) No. 132/ALD/2017 filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016. Asset Reconstruction Company (India) Limited, the financial creditor, initiated Corporate Insolvency Resolution Process (CIRP) against Shamken Cotsyn Limited, the corporate debtor. The corporate debtor had taken financial assistance from Karnataka Bank Limited (KBL), which later assigned its rights to the applicant. The corporate debtor faced financial difficulties, leading to defaults and various legal proceedings, including references to BIFR and appeals to AAIFR and the High Court.

## Facts

Asset Reconstruction Company (India) Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Shamken Cotsyn Limited. Shamken Cotsyn Limited had approached Karnataka Bank Limited (KBL) for financial assistance, and KBL sanctioned a term loan of Rs. 6.5 crores. KBL later assigned its rights to Asset Reconstruction Company (India) Limited. The corporate debtor defaulted on its payments, leading to the application for CIRP. The corporate debtor had previously filed references with BIFR, which were rejected. The corporate debtor also filed an application before the High Court under Sections 391/394 of the Companies Act, 1956, for a scheme of arrangement. The financial creditor also initiated proceedings under the SARFAESI Act. The

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

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

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**Reasoning:** The court found that the application was complete and that there was a default in the

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** The court applied Section 7 to the facts of the case, finding that the

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## Parties

- **Judges:** V. P. S…; Saroj Ra…
- **Appellants:** Asset Reconstructi…
- **Respondents:** Shamken Cotsyn…; M/s Shamken…

## Timeline

- **2002-08-26 — Sanction Lett…**: Karnataka Bank Limited sanctioned the Term Loan of amount Rs.6.5 crores as requested by…
- **2002-09-09 — Deed of Hypot…**: Corporate debtor executed the loan and security documents by the terms of sanction letter…

## 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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