# In the matter of SNS Diagnostic Limited IB-2260-(ND)-2019

> NCLT judgment dated 2020-01-14. Citation: TCN-2020-NCLT-02349. Utsav Securities Private Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 14 Jan 2020
- **Citation:** TCN-2020-NCLT-02349
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sns-diagnostic-limited-ib-2260-nd-2019-46978888

## Summary

### Background

Utsav Securities Private Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against SNS Diagnostics Limited due to an alleged default in settling a debt of Rs. 21,38,637, including interest. The applicant and respondent had an Overdraft Loan Agreement dated 30.01.2016, where the applicant was to advance Rs. 20,00,000 to the respondent. Between 30.03.2016 and 26.10.2018, the respondent received Rs. 17,57,185 from the applicant through bank transfers. The loan facility was renewed and expired on 01.04.2019, with the respondent liable to pay outstanding dues by 30.04.2019. The applicant issued a letter on 10.04.2019 informing the respondent of the repayment

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## Facts

Utsav Securities Private Limited (Applicant) and SNS Diagnostics Limited (Respondent) entered into an Overdraft Loan Agreement on 30.01.2016, where the Applicant agreed to advance Rs. 20,00,000 to the Respondent. Between 30.03.2016 and 26.10.2018, the Respondent received Rs. 17,57,185 from the Applicant through various bank transfers. The loan facility was renewed but expired on 01.04.2019, with the Respondent required to pay outstanding dues by 30.04.2019. The Applicant issued a letter on 10.04.2019, reminding the Respondent of the repayment deadline. The Respondent failed to make any payments. The Applicant filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate CIRP against the Respondent for a default of Rs. 21,38,637,

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## Issues and analysis

### Issue 1: Whether the application filed by Utsav Securities Private Limited under Section 7 of the Insolvency …

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

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**Reasoning:** The Tribunal considered the loan agreement, demand letters, and the Respondent's

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues by

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**Application:** The Tribunal applied Section 7 to the facts, noting the Respondent's default,

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## Parties

- **Judges:** P.S.N. P…; V.K. SUB…
- **Appellants:** Utsav Securities…
- **Respondents:** SNS Diagnostics…
- **Advocates:** Sanchita Bh…; Nikhil Kr…

## Timeline

- **2016-01-30 — Overdraft Loan…**: Applicant and Respondent entered into an Overdraft Loan Agreement where the Applicant was…
- **2016-03-30 — Loan Disbursem…**: Start date of loan disbursement…

## 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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