# In the matter of Tirupur Sri Senthil Cotton Mill Limited IBA-910-2019

> NCLT judgment dated 2019-09-25. Citation: TCN-2019-NCLT-01261. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 25 Sept 2019
- **Citation:** TCN-2019-NCLT-01261
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/tirupur-sri-senthil-cotton-mill-limited-iba-910-2019-05d21b15

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Mr. Ce. K. Thurraiswami, the Financial Creditor, against M/s. Tirupur Sri Senthil Cotton Mills Limited, the Corporate Debtor, for initiation of the Corporate Insolvency Resolution Process (CIRP). The Corporate Debtor defaulted in repaying a principal amount of ₹10,00,000 together with interest, aggregating to ₹16,37,809 as of 31.12.2018. The Financial Creditor had lent the principal amount to the Corporate Debtor through a third person, Mr. Sasivarnan, who executed a Demand Promissory Note. A Tripartite Agreement of Novation was entered into, where the Financial Creditor disbursed ₹10,00,000 to Mr. Sasivarnan for repayment of a loan borrowed by the Corporate Debtor

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## Facts

Mr. Ce. K. Thurraiswami, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Tirupur Sri Senthil Cotton Mills Limited, the Corporate Debtor. The Corporate Debtor defaulted on repaying a principal amount of ₹10,00,000, with interest, totaling ₹16,37,809 as of 31.12.2018. The Financial Creditor lent ₹10,00,000 to the Corporate Debtor through Mr. Sasivarnan, who executed a Demand Promissory Note on 18.01.2012. A Tripartite Agreement of Novation was entered on 18.01.2013, where the Financial Creditor disbursed ₹10,00,000 to Mr. Sasivarnan for repayment of a loan the Corporate Debtor borrowed from Kotak Mahindra Bank. The Corporate Debtor

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## Issues and analysis

### Issue 1: Whether the Financial Creditor has proved the existence of debt and default by the Corporate …

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

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**Reasoning:** The Adjudicating Authority considered the loan disbursement documents, the Tripartite

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**Interpretation:** Section 7 of the IBC is interpreted to mean that if a financial creditor

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**Application:** In this case, the Financial Creditor provided sufficient evidence, including

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## Parties

- **Judges:** B.S.V. Prakash…; S. VIJAYARA…
- **Appellants:** Ce. K Thurr…
- **Respondents:** M/s. Tirupur Sri…
- **Advocates:** Shri. S. Sathiyana…; Shri. S. Sankarana…

## Timeline

- **2012-01-18 — Demand Promiss…**: Mr. Sasivarnan executed a Demand…
- **2013-01-18 — Tripartite Agreement of…**: A Tripartite Agreement of Novation was entered into between the Financial Creditor, Mr.…

## 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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