# In the matter of Southern Fuel Limited IBA-834-2020

> NCLT judgment dated 2021-09-28. Citation: TCN-2021-NCLT-00967. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 28 Sept 2021
- **Citation:** TCN-2021-NCLT-00967
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/southern-fuel-limited-iba-834-2020-ce965be0

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by K. Raja Mannar, a financial creditor, against M/s. Southern Fuel Limited, the corporate debtor, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The financial creditor claimed a default on a loan of Rs. 5,00,000/- disbursed to the corporate debtor, evidenced by a promissory note. The corporate debtor failed to repay the loan despite repeated demands, citing a liquidity crunch.

## Facts

K. Raja Mannar, the financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Southern Fuel Limited, the corporate debtor. The financial creditor disbursed a loan of Rs. 5,00,000/- to the corporate debtor on 12.10.2018, secured by a promissory note with a 15% per annum interest rate. The corporate debtor was incorporated on 23.04.1993 with CIN: L02310TZ1993PLC012154. The financial creditor claimed a total amount of Rs. 5,62,500/-, including interest. The corporate debtor, in its reply dated 15.02.2019, admitted the liability but pleaded inability to repay due to a liquidity crunch. The financial creditor sent letters on 24.12.2018 and 09.02.2019 demanding repayment. The application was filed on 13.03.2020. The

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

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

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**Reasoning:** The court observed that the application was filed under Section 7 of the IBC. The court

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

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**Application:** The court determined that the application was filed in accordance with Section

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## Parties

- **Judges:** Sucharit…; Anil Ku…
- **Appellants:** K. Raja M…
- **Respondents:** M/s. Southern…

## Timeline

- **1993-04-23 — Incorporation of…**: M/s. Southern Fuel…
- **2018-10-12 — Loan Disbur…**: The Financial Creditor disbursed a loan of…

## 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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