# In the matter of Tirupati Jute Industries Ltd. CP (IB) No. 508-KB-2017

> NCLT judgment dated 2018-01-22. Citation: TCN-2018-NCLT-01914. Small Industries Development Bank of India (SIDBI) filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 22 Jan 2018
- **Citation:** TCN-2018-NCLT-01914
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/tirupati-jute-industries-ltd-cp-ib-no-508-kb-2017-a6e830c4

## Summary

### Background

Small Industries Development Bank of India (SIDBI) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate corporate insolvency resolution process against Tirupati Jute Industries Ltd. SIDBI claimed that Tirupati Jute Industries Ltd. defaulted on a payment of Rs. 7,18,21,128. SIDBI had granted a secured business loan to Tirupati Jute Industries Ltd. for Rs. 6,40,00,000, with 90% disbursed on 13/1/2015. The corporate debtor failed to repay the loan, leading to the account being classified as NPA on 8/10/2015. SIDBI issued a recall notice on 24/2/2016. Tirupati Jute Industries Ltd. denied the allegations and claimed the application was not maintainable due to non-joinder and misjoinder of parties. They also stated they had approached

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## Facts

Small Industries Development Bank of India (SIDBI) extended a secured business loan of Rs. 6,40,00,000 to Tirupati Jute Industries Ltd., with 90% (Rs. 5,76,00,000) disbursed by 13/1/2015. Tirupati Jute Industries Ltd. defaulted on repayments, leading to a total outstanding of Rs. 7,18,21,128 as of 31/7/2017. SIDBI classified the account as a Non-Performing Asset (NPA) on 8/10/2015 and issued a recall notice on 24/2/2016. Tirupati Jute Industries Ltd. acknowledged the debt through a Balance Confirmation Letter dated 28/2/2015. SIDBI initiated recovery proceedings under the SARFAESI Act, 2002, including issuing a demand notice under Sec. 13(2). Tirupati Jute Industries Ltd. proposed a settlement on 25/8/2017 to pay Rs. 6 crore, which SIDBI rejected on 4/9/2017. Tirupati

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## Issues and analysis

### Issue 1: Whether the application filed by the financial creditor, Small Industries Development Bank of India …

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

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**Reasoning:** The court considered the documents filed by SIDBI, including the loan agreement,

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** In this case, SIDBI provided sufficient evidence to demonstrate that Tirupati

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## Parties

- **Judges:** V. P. S…; Jinan…
- **Appellants:** Small Industries…
- **Respondents:** Tirupati Jute…

## Timeline

- **2015-01-13 — Loan Disbur…**: 90% of the sanctioned loan amount was…
- **2015-03-01 — Jute Mill L…**: Tirupati Jute Industries Ltd. stated that their jute mill was under lockout since March…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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