# In the matter of Shree Sai Smelters (India) Ltd. I.A. No. 45-2019 in CP (IB) No. 23-GB-2019

> NCLT judgment dated 2019-08-23. Citation: TCN-2019-NCLT-01806. Punjab National Bank filed an application under Section 7 of the Insolvency & Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 23 Aug 2019
- **Citation:** TCN-2019-NCLT-01806
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shree-sai-smelters-india-ltd-ia-no-45-2019-in-cp-ib-no-23-gb-2019-420f45f4

## Summary

### Background

Punjab National Bank filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, against Shree Sai Smelters (India) Ltd. for initiating Corporate Insolvency Resolution Process (CIRP). The corporate debtor (CD) had approached the financial creditor (FC) for settlement under OTS (One Time Settlement), but failed to honor the terms and conditions, except for a partial payment. The CD also filed an interim application for dismissal of the main application, arguing that the OTS made the company application infructuous. The FC cancelled the OTS proposal due to non-compliance by the CD. The Tribunal heard arguments on both the interim application and the main company petition.

## Facts

Punjab National Bank (PNB) extended credit facilities to Shree Sai Smelters (India) Ltd. amounting to Rs. 15,25,00,000.00 between May 20, 2005, and August 20, 2014, secured by various security documents. The account was declared a Non-Performing Asset (NPA) on July 27, 2015, due to default by Shree Sai Smelters. As of February 28, 2018, the amount due was Rs. 17,52,42,104.49. Shree Sai Smelters approached PNB for a settlement under a One Time Settlement (OTS) scheme but failed to comply with the terms, only paying a small portion of Rs. 7,00,00,000.00. Shree Sai Smelters filed an interim application (I.A. No.45 of 2019) seeking dismissal of PNB's insolvency application, arguing that the OTS rendered the application infructuous. PNB cancelled the OTS due to

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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 defaulted on its loan repayment obligations to the

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## Parties

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

## Timeline

- **2005-05-20 — Credit Facilities…**: Punjab National Bank sanctioned credit facilities to Shree Sai Smelters (India) Ltd. on…
- **2014-08-20 — Credit Facilities…**: Punjab National Bank sanctioned credit facilities to Shree Sai Smelters (India) Ltd. on…

## 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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