# In the matter of Steel Konnect (India) Pvt. Ltd. CP (IB) No. 5-7-Ahm-2017

> NCLT judgment dated 2017-04-19. Citation: TCN-2017-NCLT-00895. Hero FinCorp Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 19 Apr 2017
- **Citation:** TCN-2017-NCLT-00895
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/steel-konnect-india-pvt-ltd-cp-ib-no-5-7-ahm-2017-21c8d501

## Summary

### Background

Hero FinCorp Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Steel Konnect (India) Private Limited. The petition was based on a default in repayment of a loan provided by Hero FinCorp to Steel Konnect under a Master Facility Agreement dated 18.12.2015. The agreement stipulated that Hero FinCorp would advance a loan of Rs. 7,00,00,000 to Steel Konnect, secured by a hypothecation lien on machinery. Steel Konnect also furnished personal guarantees to repay the loan. Supplementary agreements were also executed on 18.12.2015 and 29.12.2015, specifying repayment terms within 60 months. Hero FinCorp disbursed Rs. 1,10,14,570 to Steel Konnect's bank account and Rs. 5,53,99,250 to Anupam Industries Ltd. Steel Konnect defaulted on

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## Facts

Hero FinCorp Limited (Financial Creditor) entered into a Master Facility Agreement with Steel Konnect (India) Private Limited (Corporate Debtor) on 18.12.2015, agreeing to provide a loan of Rs. 7,00,00,000. The loan was secured by a hypothecation lien on machinery and personal guarantees. Supplementary agreements were also executed on 18.12.2015 and 29.12.2015, specifying repayment terms within 60 months. Hero FinCorp disbursed Rs. 1,10,14,570 to Steel Konnect's bank account and Rs. 5,53,99,250 to Anupam Industries Ltd. Steel Konnect defaulted on monthly installments from November 2016. Hero FinCorp terminated the agreement on 13.01.2017 and invoked arbitration. Hero FinCorp filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Corporate

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## Issues and analysis

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

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

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**Reasoning:** The Adjudicating Authority reviewed the Master Facility Agreement, personal guarantees,

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

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**Application:** The Adjudicating Authority applied Section 7 of the IBC to the facts, finding

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## Parties

- **Judges:** BIKKI RAVEENDRA…
- **Appellants:** Hero Fincor…
- **Respondents:** Steel Konnect…

## Timeline

- **2015-12-18 — Master Facility…**: Hero FinCorp and Steel Konnect entered into a Master Facility Agreement for a loan of Rs.…
- **2015-12-18 — Personal Gua…**: Corporate Debtor furnished Personal Guarantees promising to repay the entire loan amount…

## 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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