# In the matter of Sunar Jewels Pvt. Ltd. (IB)-1444(PB)-2018

> NCLT judgment dated 2020-03-04. Citation: TCN-2020-NCLT-01649. The case involves an application filed by Reliance Commercial Finance Ltd. against Sunar Jewels…

- **Court:** NCLT
- **Order date:** 4 Mar 2020
- **Citation:** TCN-2020-NCLT-01649
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sunar-jewels-pvt-ltd-ib-1444pb-2018-8e118fb7

## Summary

### Background

The case involves an application filed by Reliance Commercial Finance Ltd. against Sunar Jewels Pvt Ltd. under Section 7 of the Insolvency & Bankruptcy Code, 2016 (CIRP). Reliance Commercial Finance Ltd. is seeking the admission of its claim to the extent of Rs. 72,30,77,027/-. The Resolution Professional (RP) has already admitted a portion of the claim, amounting to ₹ 65,81,74,830/-, but rejected the remaining part due to penal interest, expenses incurred, and discrepancies in the amount paid by the Corporate Debtor.

## Facts

Reliance Commercial Finance Ltd. filed an application against Sunar Jewels Pvt Ltd. under Section 7 of the Insolvency & Bankruptcy Code, 2016 (CIRP), seeking the admission of its claim amounting to Rs. 72,30,77,027/-. The Resolution Professional (RP) admitted ₹ 65,81,74,830/- of the claim but rejected the remaining portion, citing penal interest, expenses incurred, and discrepancies in the amount paid by the Corporate Debtor. The rejected penal interest amounted to ₹4,20,42,594/-, and the pre-acquisition expenses were ₹ 23,27,156/-, which were rejected based on RBI guidelines. The applicant, being an assignee, sought to charge penal interest, which the RP deemed inappropriate as there was no excess drawing/temporary overdraft limit after the loan was assigned. The

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## Issues and analysis

### Issue 1: Whether the Resolution Professional was correct in rejecting the penal interest claimed by the …

**Ratio:** Penal interest can only be charged on excess drawing/Temporary Overdraft Limit. An

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**Reasoning:** The court reasoned that since the applicant is an assignee and there was no excess

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**Interpretation:** This interprets the principle that penal interest is contingent upon the

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**Application:** In this case, because the applicant was an assignee and no excess

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## Parties

- **Judges:** SH. B.S.V.…; Sh. Hemant Kumar…
- **Appellants:** Reliance Commercia…
- **Respondents:** Sunar Jewels Pvt…
- **Advocates:** Milan Sing…; Anirudh Bhattachar…; +1 more

## Timeline

- **2020-03-04 — Order Del…**: Order delivered on…
- **2020-03-16 — Application…**: Application listed for…

## 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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