# In the matter of Srirangam Priya Promoters Private Limited IBA-60-2020

> NCLT judgment dated 2021-02-23. Citation: TCN-2021-NCLT-02948. M/s. Sri Ganapathi Financiers, the financial creditor, filed an application under Section 7 of…

- **Court:** NCLT
- **Order date:** 23 Feb 2021
- **Citation:** TCN-2021-NCLT-02948
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/srirangam-priya-promoters-private-limited-iba-60-2020-8507f7d7

## Summary

### Background

M/s. Sri Ganapathi Financiers, the financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against M/s. Srirangam Priya Promoters Private Limited, the corporate debtor. The financial creditor claimed that the corporate debtor defaulted on a loan of Rs. 50,00,000/- given on 20.10.2015, with an interest rate of 25.2% per annum, resulting in an outstanding debt of Rs. 76,53,969.10. The date of default was stated as 19.08.2019. The respondent, represented by its Managing Director Mr. A. Francis, contested the application, stating that the loan was availed by Mr. A. Francis in his personal capacity and not by the corporate debtor. The applicant relied on an

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## Facts

M/s. Sri Ganapathi Financiers (Financial Creditor) claimed that M/s. Srirangam Priya Promoters Private Limited (Corporate Debtor) defaulted on a loan of Rs. 50,00,000/- given on 20.10.2015, with an interest rate of 25.2% per annum. The Financial Creditor claimed an outstanding debt of Rs. 76,53,969.10, with the date of default being 19.08.2019. The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP. The Corporate Debtor, represented by its Managing Director Mr. A. Francis, contested the application, stating that the loan was availed by Mr. A. Francis in his personal capacity and not by the Corporate Debtor. The Financial Creditor relied on an unregistered Memorandum of Understanding (MoU)

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## Issues and analysis

### Issue 1: Whether the financial creditor has proven the existence of a debt and default on the part of the …

**Ratio:** To initiate CIRP under Section 7 of the IBC, the financial creditor must prove the

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**Reasoning:** The Adjudicating Authority found that the financial creditor failed to provide sufficient

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**Interpretation:** Section 7 of the IBC requires the financial creditor to demonstrate a direct

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**Application:** In this case, the financial creditor failed to prove that the loan amount was

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## Parties

- **Judges:** R. Sucha…; B. Anil…
- **Appellants:** M/s. Sri Ganapathi…
- **Respondents:** M/s. Srirangam…
- **Advocates:** K. Sure…; Abhinav Parthasara…

## Timeline

- **2015-10-20 — Loan Disbur…**: M/s. Sri Ganapathi Financiers allegedly disbursed a loan of Rs. 50,00,000/- to M/s.…
- **2019-07-05 — Unregister…**: An unregistered Memorandum of Understanding (MoU) was allegedly executed between the…

## 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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