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

> NCLT judgment dated 2018-05-29. Citation: TCN-2018-NCLT-01359. The Asset Reconstruction Company (India) Limited filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 29 May 2018
- **Citation:** TCN-2018-NCLT-01359
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shamken-spinners-limited-company-petition-ibno-131-ald-2017-96d390fe

## Summary

### Background

The Asset Reconstruction Company (India) Limited filed a petition 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, for initiating Corporate Insolvency Resolution Process (CIRP) against Shamken Spinners Limited. The applicant, Asset Reconstruction Company (India) Limited, is a public limited company registered with the RBI and engaged in securitization and reconstruction of financial assets. Shamken Spinners Limited, the corporate debtor, is a company incorporated in 1990. The corporate debtor had approached Development Credit Bank Limited (DCB) for a term loan, which was sanctioned. Subsequently, a Deed of Assignment was executed between DCB and Asset

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## Facts

Asset Reconstruction Company (India) Limited (Applicant) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Shamken Spinners Limited (Corporate Debtor). The Corporate Debtor had obtained a term loan from Development Credit Bank Limited (DCB), which was later assigned to the Applicant via a Deed of Assignment dated 2008-03-14. The Corporate Debtor defaulted on the loan, with an outstanding amount of Rs. 40,53,83,922 as of 2017-03-31. The Corporate Debtor raised objections, including the maintainability of the petition due to a defective power of attorney and concealment of facts regarding the Corporate Debtor being declared NPA by ICICI Bank Ltd and other lenders in 2004. The

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## Issues and analysis

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

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

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**Reasoning:** The NCLT considered the documents submitted by the Financial Creditor, including the

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

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**Application:** The NCLT found that the Financial Creditor had demonstrated the existence of a

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## Parties

- **Judges:** SH. V.P.…; Ms Saroj R…
- **Appellants:** Asset Reconstructi…
- **Respondents:** Shamken Spinner…; M/s Shamken…

## Timeline

- **2003-03-07 — Sanction…**: Development Credit Bank Limited (DCB) sanctioned the Term Loan amounting to Rs 6 crores…
- **2003-03-17 — Deed of Hypot…**: The corporate debtor executed the loan and security documents by the terms of sanction…

## 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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