# In the matter of Spring Field Shelters Pvt. Limited IBA-309-2019

> NCLT judgment dated 2019-06-27. Citation: TCN-2019-NCLT-02762. M/s. Vaaman Capital, the financial creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 27 Jun 2019
- **Citation:** TCN-2019-NCLT-02762
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/spring-field-shelters-pvt-limited-iba-309-2019-a5250506

## Summary

### Background

M/s. Vaaman Capital, the financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Spring Field Shelters Private Limited, the corporate debtor, due to a default in repayment of ₹26,29,189. The date of default was mentioned as 2017-02-10. The corporate debtor had availed a loan of ₹46,00,000 in May 2016, repayable in 24 weekly installments with an interest rate of 22% per annum. The corporate debtor provided 24 post-dated cheques of ₹2,50,000 each, totaling ₹50,00,000, including principal and interest, along with 3 blank cheques as security.

## Facts

M/s. Vaaman Capital (Financial Creditor) extended a loan of ₹46,00,000 to M/s. Spring Field Shelters Pvt. Ltd. (Corporate Debtor) in May 2016. The loan was to be repaid in 24 weekly installments at an interest rate of 22% per annum. The Corporate Debtor provided 24 post-dated cheques amounting to ₹50,00,000, including principal and interest, and 3 blank cheques as security. The Corporate Debtor defaulted on 2017-02-10, with an outstanding amount of ₹26,29,189. The Financial Creditor filed an application under Section 7 of the IBC to initiate CIRP. The Corporate Debtor claimed to have made cash payments not reflected in the accounts and argued that the interest rate was exorbitant under the Tamilnadu Money Lenders Act. The Corporate Debtor also contended that the loan

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor is maintainable under Section 7 of the …

**Ratio:** Section 5(8) of the I&BC 2016 defines 'financial debt' as a debt along with interest,

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**Reasoning:** The NCLT reasoned that the Corporate Debtor signed the loan agreement, which constitutes

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**Interpretation:** The definition of 'financial debt' under the IBC is broad and includes any debt

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**Application:** In this case, the loan agreement, promissory note, and cheques provided by the

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## Parties

- **Judges:** B.S.V. Prakash…; S. VIJAYARA…
- **Appellants:** M/s. Vaaman…
- **Respondents:** M/s. Spring Field…; M/s. Spring Field…

## Timeline

- **2016-05-01 — Loan Agre…**: Corporate Debtor availed loan of…
- **2017-02-10 — Date of D…**: Corporate Debtor defaulted…

## 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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