# In the matter of Swati Udyog Private Limited CP(IB)No.956-KB-2018

> NCLT judgment dated 2019-11-26. Citation: TCN-2019-NCLT-00434. The State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 26 Nov 2019
- **Citation:** TCN-2019-NCLT-00434
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/swati-udyog-private-limited-cpibno956-kb-2018-01d80cec

## Summary

### Background

The State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s Swati Udyog Private Limited. The application was based on the Corporate Debtor's alleged default in paying a financial debt of Rs. 68,07,32,424/-. The Financial Creditor claimed that the Corporate Debtor had defaulted on loan repayments, leading to the application for CIRP.

## Facts

In 2007, State Bank of India granted and disbursed a term loan of Rs. 11,95,000/- and cash credit facilities of Rs. 5,73,000/- to M/s Swati Udyog Private Limited. The terms of the loan and cash credit facilities were extended and enhanced over time. On 16.04.2015, the Bank extended the time to pay the outstanding amount. On 27.11.2015, the Bank called upon the Corporate Debtor to deposit the amount towards interest, which had become irregular. The Corporate Debtor did not respond, and on 16.12.2015, the loan account was declared NPA on 23.02.2016. The Bank sent a notice under Section 13(2) of the SURFAESI Act, 2002, and filed a recovery proceeding before DRT, Kolkata. The Corporate Debtor claimed to have paid Rs. 108,78,78,947/- to the Bank but failed to pay the

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## Issues and analysis

### Issue 1: Whether the Financial Creditor could establish that there is a financial debt payable by the …

**Ratio:** The scope of inquiry under Section 7 of the Insolvency and Bankruptcy Code, 2016 is

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**Reasoning:** The court held that the Bank had proved that there was a financial debt payable by the

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**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to ascertain the

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**Application:** The court applied the principle by examining the loan agreements and payment

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** State Bank of…
- **Respondents:** Swati Udyog…; M/s Swati Udyog…
- **Advocates:** Rajarshi…; Uttiyo Ma…; +1 more

## Timeline

- **2007-01-01 — Loan Gra…**: State Bank of India granted a term loan and cash credit facilities to M/s Swati Udyog…
- **2015-04-16 — Extension o…**: The Bank extended the time for the Corporate…

## 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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