# In the matter of Shree Sai Rolling Mills (India) Ltd. I.A. No. 56-2019 in CP (IB) No. 22-GB-2019

> NCLT judgment dated 2019-08-23. Citation: TCN-2019-NCLT-01814. 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-01814
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shree-sai-rolling-mills-india-ltd-ia-no-56-2019-in-cp-ib-no-22-gb-2019-94fbe8fe

## Summary

### Background

Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Shree Sai Rolling Mills (India) Ltd. The application was for initiating the Corporate Insolvency Resolution Process (CIRP) due to the corporate debtor's default in repaying its debt. The corporate debtor had approached the financial creditor for settlement under OTS (One Time Settlement), but failed to honor the terms and conditions of the OTS, except for paying a small amount. 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 Financial Creditor cancelled the OTS proposal and pressed for disposal of the CIRP application.

## Facts

Punjab National Bank (PNB) sanctioned credit facilities to M/s. Shree Sai Rolling Mills (India) Ltd. amounting to Rs. 35.80 crores between May 20, 2005, and August 29, 2014. These facilities were secured by hypothecation and mortgage of the corporate debtor's properties. The account was declared a Non-Performing Asset (NPA) on March 31, 2016, due to default by the corporate debtor. As of February 28, 2018, an amount of Rs. 45,33,35,395.58 was due and payable. The corporate debtor approached PNB for a settlement under the One Time Settlement (OTS) scheme but failed to adhere to the agreed terms, only paying Rs. 7 crores. PNB cancelled the OTS proposal due to non-compliance. The corporate debtor filed an interim application (IA No.44 of 2019) seeking dismissal of the

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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 had defaulted in

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

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**Application:** The Corporate Debtor defaulted in repaying the loan amount to the Financial

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## Parties

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

## Timeline

- **2005-05-20 — Sanction of Credit…**: Punjab National Bank sanctioned credit facilities to M/s. Shree Sai Rolling Mills (India)…
- **2014-08-29 — Sanction of Credit…**: Punjab National Bank sanctioned credit facilities to M/s. Shree Sai Rolling Mills (India)…

## 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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