# In the matter of SRK Devbuild Private Limited C.P. (I.B) No. 370-7-NCLT-AHM-2018

> NCLT judgment dated 2020-01-03. Citation: TCN-2020-NCLT-02542. The case involves an application filed by AU Small Finance Bank Limited under Section 7 of the…

- **Court:** NCLT
- **Order date:** 3 Jan 2020
- **Citation:** TCN-2020-NCLT-02542
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/srk-devbuild-private-limited-cp-ib-no-370-7-nclt-ahm-2018-5673a384

## Summary

### Background

The case involves an application filed by AU Small Finance Bank Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against SRK Devbuild Private Limited, due to default in repayment of a term loan facility. The bank claimed a default date of 31/05/2016 and an outstanding amount of Rs. 3,34,96,299 as of 25/07/2018. The corporate debtor raised objections, including arguments about the application's maintainability, the existence of co-borrowers, and the validity of the security documents.

## Facts

AU Small Finance Bank Limited, a banking company, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against SRK Devbuild Private Limited. SRK Devbuild Private Limited was incorporated on 25/08/2011. The bank had sanctioned a term loan facility of Rs. 4,00,00,000 to the company, as per the sanction letter dated 09/02/2015, and a loan agreement was executed on 11/02/2015. The corporate debtor defaulted in repayment, leading to the account being classified as NPA on 31/05/2016. The bank issued a demand notice under Section 13(2) of the SARFAESI Act on 30/08/2016, demanding Rs. 4,70,34,931. The bank took symbolic possession of the secured asset on 10/12/2016 and issued a sale notice

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## Issues and analysis

### Issue 1: Whether the application filed by AU Small Finance Bank Limited under Section 7 of the Insolvency …

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

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**Reasoning:** The Adjudicating Authority considered the objections raised by the corporate debtor

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

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**Application:** In this case, the Adjudicating Authority found that the petitioner bank had

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## Parties

- **Judges:** Harihar Prakash…; Prasanta Kumar…
- **Appellants:** AU Small Finance…
- **Respondents:** SRK Devbuild…
- **Advocates:** Lalit M…; Vijayesh…

## Timeline

- **2011-08-25 — Incorporation of SRK…**: SRK Devbuild Private…
- **2015-02-09 — Sanction of Term Loan…**: AU Small Finance Bank Limited sanctioned a term loan facility of Rs. 4,00,00,000 to SRK…

## 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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