# In the matter of Sunil Ispat & Power Limited C.P.(IB) No.754-KB-2017

> NCLT judgment dated 2018-07-31. Citation: TCN-2018-NCLT-01032. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 31 Jul 2018
- **Citation:** TCN-2018-NCLT-01032
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sunil-ispat-power-limited-cpib-no754-kb-2017-1bced540

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Asset Reconstruction Co. India Ltd. (the Financial Creditor) against Sunil Ispat & Power Limited (the Corporate Debtor). The State Bank of India had initially provided credit facilities to the Corporate Debtor in 2005, which were enhanced over time. The Corporate Debtor executed various loan agreements and created equitable mortgages on their immovable properties. However, the Corporate Debtor failed to repay the debt, leading to a breach of contract. Subsequently, State Bank of India assigned its debt to Asset Reconstruction Co. India Ltd.

## Facts

In 2005, State Bank of India extended a credit facility of Rs. 18.30 crores to Sunil Ispat & Power Limited (Corporate Debtor), which was later enhanced. The Corporate Debtor executed loan agreements and created mortgages. The Corporate Debtor defaulted on repayments, breaching the contract. State Bank of India initiated proceedings before the Debts Recovery Tribunal for Rs. 25,75,25,402.26. On 2014-07-18, State Bank of India assigned the debt to Asset Reconstruction Co. India Ltd. (Financial Creditor), requiring the Corporate Debtor to pay Rs. 37,53,66,081.00. The Corporate Debtor defaulted, leading to the account being declared a Non-Performing Asset. Notice of the petition was served, but the Corporate Debtor did not appear. The Financial Creditor proposed Arun

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, should be …

**Ratio:** Section 7(5) of the Insolvency & Bankruptcy Code, 2016, states that the Adjudicating

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had committed a default of

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**Interpretation:** Section 7 of the I&B Code allows a financial creditor to initiate CIRP

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**Application:** The Adjudicating Authority applied the provisions of Section 7(5) to the facts

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## Parties

- **Judges:** Madan B.…
- **Appellants:** Asset Reconstructi…
- **Respondents:** Sunil Ispat &…

## Timeline

- **2005-01-01 — Credit Facilit…**: State Bank of India provided a credit facility of Rs. 18.30 crores to the Corporate…
- **2014-07-18 — Debt Assi…**: State Bank of India assigned its debt against the Corporate Debtor to the Financial…

## 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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