# In the matter of Shree Sai Prakash Alloys Ltd. I.A. No. 58-2019 in CP (IB) No. 24-GB-2019

> NCLT judgment dated 2019-08-23. Citation: TCN-2019-NCLT-01805. Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 23 Aug 2019
- **Citation:** TCN-2019-NCLT-01805
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shree-sai-prakash-alloys-ltd-ia-no-58-2019-in-cp-ib-no-24-gb-2019-81cf7e0b

## Summary

### Background

Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Shree Sai Prakash Alloys Pvt. Ltd. for initiating the Corporate Insolvency Resolution Process (CIRP). The bank had sanctioned credit facilities to the corporate debtor, which later defaulted, leading to the account being declared as NPA. The corporate debtor approached the bank for a settlement under OTS, but failed to honor the terms. The corporate debtor also filed an interim application for dismissal of the CIRP application, arguing that the main company application had become infructuous due to the OTS. The NCLT heard arguments on the interim application and the main company petition.

## Facts

Punjab National Bank (PNB) sanctioned credit facilities to Shree Sai Prakash Alloys Pvt. Ltd. The corporate debtor (CD) defaulted on payments, leading PNB to classify the account as a Non-Performing Asset (NPA) on May 12, 2015. As of February 20, 2018, the outstanding amount was Rs. 84,46,17,450.68. PNB filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) for initiating Corporate Insolvency Resolution Process (CIRP). The CD approached PNB for a One-Time Settlement (OTS) but failed to comply with the terms, only paying Rs. 7,00,00,000.00. The CD filed an interim application (IA No.46 of 2019) for dismissal of the CIRP application, arguing that the OTS made the application infructuous. The CD also filed a Writ Petition before the Gauhati High

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency & …

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

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**Reasoning:** The Adjudicating Authority was satisfied that the Corporate Debtor defaulted in making

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The Corporate Debtor admitted the default and the Financial Creditor fulfilled

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## Parties

- **Judges:** Hari Venkata…; Ashutosh C…
- **Appellants:** Punjab National…
- **Respondents:** M/s. Shree Sai…

## Timeline

- **2004-04-26 — Sanction of Credit…**: Punjab National Bank sanctioned credit facilities to Shree Sai Prakash Alloys Pvt. Ltd.…
- **2015-05-12 — Account Decla…**: The account of Shree Sai Prakash Alloys Pvt. Ltd. was declared as NPA on account of…

## 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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