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

> NCLT judgment dated 2019-09-25. Citation: TCN-2019-NCLT-01271. 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-01271
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/tirupur-sri-senthil-cotton-mill-limited-iba-910-2019-18243dce

## 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 Corporate Debtor acknowledged the loan and undertook to repay it with interest. The Corporate Debtor also wrote a

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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 accrued interest bringing the total outstanding to ₹16,37,809 as of December 31, 2018. The Financial Creditor had initially lent the money through a third party, Mr. Sasivarnan, who executed a Demand Promissory Note for the principal amount on January 18, 2012. A Tripartite Agreement of Novation was subsequently entered into on January 18, 2013, between Mr. Sasivarnan, the Financial Creditor, and the Corporate Debtor, wherein

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## Issues and analysis

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

**Ratio:** The legal principle applied is that under Section 7 of the Insolvency and Bankruptcy

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**Reasoning:** The court reasoned that the Financial Creditor had presented sufficient evidence,

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

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**Application:** In this specific case, the Financial Creditor provided evidence of the loan

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## Parties

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

## Timeline

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