# In the matter of Sitarganj Fibers Limited Company Petitiion (IB)No.390-ALD-2018

> NCLT judgment dated 2019-04-09. Citation: TCN-2019-NCLT-04006. Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 9 Apr 2019
- **Citation:** TCN-2019-NCLT-04006
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sitarganj-fibers-limited-company-petitiion-ibno390-ald-2018-0816fbf8

## Summary

### Background

Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s Sitarganj Fibers Limited for initiation of Corporate Insolvency Resolution Process (CIRP). The application was filed due to the corporate debtor's default in repayment of a bank loan. The financial creditor claimed a default amount of Rs. 67,73,05,842/- as of 31.08.2018, along with interest.

## Facts

Punjab National Bank (PNB) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against M/s Sitarganj Fibers Limited for initiating the Corporate Insolvency Resolution Process (CIRP). PNB, a banking institution, claimed that Sitarganj Fibers Limited defaulted on loan repayments. Sitarganj Fibers Limited had approached PNB for financial assistance in the form of cash credit and term loans, leading to the creation of equitable mortgages. The account was declared a Non-Performing Asset (NPA) on 31.12.2015 due to continuous default. PNB claimed a default amount of Rs. 67,73,05,842/- as of 31.08.2018, including interest. The application was supported by documents such as sanction letters, security documents, undertakings, and board resolutions

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## Issues and analysis

### Issue 1: Whether the application filed by Punjab National Bank under Section 7 of the Insolvency and …

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

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**Reasoning:** The court observed that the application was complete as it contained all the necessary

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

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**Application:** The court found that Punjab National Bank's application was complete and

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## Parties

- **Judges:** Harihar Prakash…; Saroj Ra…
- **Appellants:** Punjab National…
- **Respondents:** M/s Sitarganj…
- **Advocates:** Ram Kumar…; Amit Pr…

## Timeline

- **2012-03-06 — Company Incor…**: M/s Sitarganj Fibers Limited…
- **2013-05-17 — Sanction Lett…**: Date of sanction letter…

## 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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