# In the matter of Sri Guruprabha Power Limited CP (IB) No. 681-7-HDB-2018

> NCLT judgment dated 2019-09-20. Citation: TCN-2019-NCLT-01347. The petition was filed by Punjab National Bank, the Financial Creditor, stating that Sri…

- **Court:** NCLT
- **Order date:** 20 Sept 2019
- **Citation:** TCN-2019-NCLT-01347
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sri-guruprabha-power-limited-cp-ib-no-681-7-hdb-2018-887d571a

## Summary

### Background

The petition was filed by Punjab National Bank, the Financial Creditor, stating that Sri Guruprabha Power Limited, the Corporate Debtor, defaulted in repaying Rs. 123,27,29,895.58. The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking admission of the petition, initiation of Corporate Insolvency Resolution Process (CIRP), granting moratorium, and appointment of an Interim Resolution Professional (IRP). The Corporate Debtor availed credit facilities from the Financial Creditor and defaulted in repayment. The account was classified as NPA, and SARFAESI Act provisions were invoked. The Corporate Debtor proposed an OTS, which the Financial Creditor sanctioned, but the Corporate Debtor failed to comply with the agreed amount.

## Facts

Punjab National Bank, the Financial Creditor, filed a petition against Sri Guruprabha Power Limited, the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016, due to a default of Rs. 123,27,29,895.58. The Corporate Debtor had availed credit facilities, including Rupee Term Loans and Cash Credit, to set up a Bio Mass Based Power Plant. The account was classified as NPA, and SARFAESI Act provisions were invoked. The Corporate Debtor proposed an OTS, which was sanctioned but not complied with. The Financial Creditor filed OA for recovery before the Debt Recovery Tribunal. The Corporate Debtor contended that the Financial Creditor failed to infuse required funds and adhere to sanctioned terms, leading to liquidity issues. The Corporate Debtor

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in …

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

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**Reasoning:** The Corporate Debtor admitted to the default, although it contended that the default

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**Interpretation:** The court interpreted Section 7 of the IBC to mean that if a default has

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**Application:** The court applied the ratio to the facts and found that the Corporate Debtor

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## Parties

- **Judges:** Ratakonda…; Narender Kumar…; +1 more
- **Appellants:** Punjab National…
- **Respondents:** Guruprabha Power…

## Timeline

- **2007-04-04 — Sanction…**: Sanction letter issued…
- **2007-06-07 — Agreement for Term Loan…**: Agreement for Term Loan…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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