# In the matter of Somnath Textile Pvt. Ltd. C.P. (I.B) No. 49-10-NCLT-AHM-2017

> NCLT judgment dated 2017-07-28. Citation: TCN-2017-NCLT-00690. Somnath Textile Private Limited filed an application under Section 10 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 28 Jul 2017
- **Citation:** TCN-2017-NCLT-00690
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/somnath-textile-pvt-ltd-cp-ib-no-49-10-nclt-ahm-2017-812bd52e

## Summary

### Background

Somnath Textile Private Limited filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The company cited a liquidity crisis and inability to repay its debts. State Bank of India (SBI), the financial creditor, had classified the debt as a non-performing asset and initiated recovery proceedings under the SARFAESI Act, including taking possession of the company's assets. The company had also filed a reference before the Board of Industrial and Financial Reconstruction (BIFR), which was later abated.

## Facts

Somnath Textile Private Limited faced a liquidity crisis and was unable to repay its debts to State Bank of India (SBI). SBI had sanctioned cash credit and term loans aggregating to Rs. 26,00,00,000/-. SBI classified the debt as a non-performing asset on May 30, 2015. SBI issued a notice under Section 13(2) of the SARFAESI Act on May 27, 2016, and the principal outstanding sum was Rs. 31,23,57,256.63, apart from interest of Rs. 67,79,29,176/-. SBI took symbolic and physical possession of the secured assets of the company. SBI also filed Original Application No. 614 of 2016 before the Debt Recovery Tribunal, Ahmedabad. Somnath Textile Private Limited filed a reference before the Board of Industrial and Financial Reconstruction (BIFR), which was later abated. Somnath

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## Issues and analysis

### Issue 1: Whether the application filed by the Corporate Debtor under Section 10 of the Insolvency and …

**Ratio:** Section 238 of the Insolvency and Bankruptcy Code has an overriding effect

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**Reasoning:** The Adjudicating Authority reasoned that the pendency of proceedings under the SARFAESI

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**Interpretation:** Section 238 of the Code gives it precedence over other laws, ensuring that the

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**Application:** The ratio was applied to the fact that SBI had already initiated proceedings

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## Parties

- **Judges:** BIKKI RAVEENDRA…
- **Appellants:** Somnath Textile…
- **Respondents:** Somnath Textile…; State Bank of…

## Timeline

- **2015-05-30 — Debt Classifie…**: State Bank of India classified the debt of Somnath Textile Private Limited as a…
- **2016-05-27 — SARFAESI…**: State Bank of India issued a notice under Section 13(2) of the SARFAESI Act to Somnath…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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