# In the matter of Sri Ganesh Sponge Iron Pvt. Ltd. CP (IB) No. 934-KB-2018

> NCLT judgment dated 2019-02-18. Citation: TCN-2019-NCLT-04799. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 18 Feb 2019
- **Citation:** TCN-2019-NCLT-04799
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sri-ganesh-sponge-iron-pvt-ltd-cp-ib-no-934-kb-2018-0fb2f999

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by M/s. Sagu India Holding Ltd. (Financial Creditor) against Sri Ganesh Sponge Iron Pvt. Ltd. (Corporate Debtor) for initiating the Corporate Insolvency Resolution Process (CIRP). The financial creditor claimed that the corporate debtor defaulted in paying an amount of Rs. 8,94,73,161/-. The dispute arose from an investment agreement dated 27.07.2011, where the financial creditor agreed to purchase shares of the corporate debtor. The corporate debtor allegedly failed to transfer the shares despite receiving the consideration amount. An arbitration award was passed in favor of the financial creditor, which the corporate debtor challenged.

## Facts

On 2011-07-27, Sagu India Holding Ltd. (Financial Creditor) and Sri Ganesh Sponge Iron Pvt. Ltd. (Corporate Debtor) entered into an investment agreement where the Financial Creditor agreed to purchase 56.47% of the Corporate Debtor's shares for Rs. 48,00,07,999. The payment was made through RTGS. The Corporate Debtor was required to submit FC-TRS forms as it was a foreign investment, but these forms were never submitted. The Financial Creditor sent a notice on 2012-02-17 to the Corporate Debtor to transfer the shares. The Corporate Debtor contended that the Financial Creditor had already taken charge of the factory. The Financial Creditor filed an arbitration petition in the District Court of Keonjhar, Odisha, which referred the dispute to a Sole Arbitrator. On

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## Issues and analysis

### Issue 1: Whether the amount claimed is the financial debt within the meaning of section 5(8) of I&B Code …

**Ratio:** Section 5(8)(c) of the I&B Code defines 'financial debt' as the debt along with

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**Reasoning:** The court reasoned that the intention of the parties was that the financial creditor

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**Interpretation:** The court interpreted Section 5(8)(c) of the I&B Code to include

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**Application:** The court applied the definition of 'financial debt' under Section 5(8)(c) of

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## Parties

- **Judges:** Madan B.…
- **Appellants:** M/s. Sagu India…
- **Respondents:** Ganesh Sponge…

## Timeline

- **2011-07-27 — Investment Ag…**: Financial creditor and corporate debtor entered into an investment agreement for purchase…
- **2012-02-17 — Notice to Transfer…**: Financial creditor sent notice to…

## 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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