# In the matter of Shree Krishna Tea Co. Pvt. Ltd. CP (IB)-16-GB-2017

> NCLT judgment dated 2017-07-20. Citation: TCN-2017-NCLT-00716. The case involves an application under Section 7 of the Insolvency & Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 20 Jul 2017
- **Citation:** TCN-2017-NCLT-00716
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shree-krishna-tea-co-pvt-ltd-cp-ib-16-gb-2017-507eda4e

## Summary

### Background

The case involves an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed by M/s. Karishma Suppliers Pvt. Ltd. (financial creditor) against M/s. Shree Krishna Tea Co. Pvt. Ltd. (corporate debtor) seeking initiation of corporate insolvency resolution process. The corporate debtor had obtained a loan of Rs. 25,00,000 from the financial creditor in 2011, agreeing to repay with 13% interest per annum. Repayments were made until 2014, after which the corporate debtor stopped paying the annual interest. A partial payment of Rs. 10,00,000 was made in 2014 towards the principal. As of June 15, 2017, the corporate debtor owed Rs. 22,78,257 to the financial creditor.

## Facts

On March 6, 2011, M/s. Shree Krishna Tea Co. Pvt. Ltd. (corporate debtor) obtained a loan of Rs. 25,00,000 from M/s. Karishma Suppliers Pvt. Ltd. (financial creditor) with an agreement to repay the loan with an interest rate of 13% per annum. The repayment was made according to the arrangement between the parties. However, after April 1, 2014, the corporate debtor stopped paying the annual interest. On August 12, 2014, the corporate debtor paid Rs. 10,00,000 towards the principal amount. As of June 15, 2017, the corporate debtor owed Rs. 22,78,257 to the financial creditor. The financial creditor then filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of corporate insolvency resolution process against the corporate

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## Issues and analysis

### Issue 1: Whether the application filed by the financial creditor meets the requirements of Section 7 of the …

**Ratio:** Section 7 of the Insolvency & Bankruptcy Code, 2016, read with Rule 4 of the

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**Reasoning:** The court found that the defects in the application were rectified, and the application

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate corporate

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

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## Parties

- **Judges:** P. K. S…
- **Appellants:** M/s. Karishma…
- **Respondents:** M/s. Shree…

## Timeline

- **2011-03-06 — Loan Agre…**: Corporate debtor obtained a loan of Rs.…
- **2014-04-01 — Default on Interest…**: Corporate debtor stopped…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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