# In the matter of Shamken Spinners Limited Company Petition (IB)No. 131-ALD-2017

> NCLT judgment dated 2018-05-29. Citation: TCN-2018-NCLT-01357. Asset Reconstruction Company (India) Limited filed a petition under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 29 May 2018
- **Citation:** TCN-2018-NCLT-01357
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shamken-spinners-limited-company-petition-ibno-131-ald-2017-7bc0bbb7

## Summary

### Background

Asset Reconstruction Company (India) Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Shamken Spinners Limited for initiation of Corporate Insolvency Resolution Process (CIRP). The corporate debtor had taken financial assistance from Development Credit Bank Limited (DCB), which sanctioned a term loan of Rs 6 crores. Later, DCB assigned its rights to Asset Reconstruction Company (India) Limited. The corporate debtor defaulted on the loan, leading to the application for CIRP.

## Facts

Asset Reconstruction Company (India) Limited, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Shamken Spinners Limited, the corporate debtor. Shamken Spinners Limited had obtained a term loan of Rs 6 crores from Development Credit Bank Limited (DCB). DCB later assigned its rights, title, and interest in the debt to Asset Reconstruction Company (India) Limited through a Deed of Assignment dated 14.03.2008. The corporate debtor defaulted on the loan, with the amount in default being Rs. 40,53,83,922 as of 31.03.2017. The corporate debtor had previously filed references with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Asset …

**Ratio:** The ratio is based on Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016, which

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**Reasoning:** The court reasoned that the financial creditor had provided sufficient evidence to prove

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**Interpretation:** The interpretation of Section 7 of the IBC is that if the financial creditor

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**Application:** The court applied this ratio to the facts of the case, noting that the

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## Parties

- **Judges:** V. P. S…; Ms Saroj R…
- **Appellants:** Asset Reconstructi…
- **Respondents:** Shamken Spinner…; SHAMKEN SPINNERS…; +1 more

## Timeline

- **2003-03-07 — Sanction Lett…**: Development Credit Bank Limited (DCB) sanctioned the Term Loan amounting to Rs 6 crores…
- **2008-03-14 — Deed of Ass…**: A Deed of Assignment was executed between The Development Credit Bank (DCB) and the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 2(1) — Application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-2)

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