# In the matter of Trusted Aerospace Engineering Private Limited CP-922-IB-2018

> NCLT judgment dated 2019-06-21. Citation: TCN-2019-NCLT-02815. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 21 Jun 2019
- **Citation:** TCN-2019-NCLT-02815
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/trusted-aerospace-engineering-private-limited-cp-922-ib-2018-5e8c568e

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Val-Met Engineering Private Limited (Financial Creditor) against Trusted Aerospace Engineering Private Limited (Corporate Debtor). The Financial Creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare a moratorium, and appoint an Interim Resolution Professional (IRP). The Financial Creditor claimed an outstanding amount of Rs. 2,13,61,067/- as of 05.09.2014. A Memorandum of Understanding (MoU) was entered into between the parties on 20.08.2013, wherein the Financial Creditor agreed to invest in the Corporate Debtor. The Corporate Debtor incurred losses and defaulted on loan payments. The Financial Creditor

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## Facts

Val-Met Engineering Private Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Trusted Aerospace Engineering Private Limited (Corporate Debtor) seeking to initiate CIRP. The Financial Creditor claimed Rs. 2,13,61,067/- outstanding as of 05.09.2014. A Memorandum of Understanding (MoU) dated 20.08.2013 existed between the parties, where the Financial Creditor was to invest Rs. 48 Crores into the Corporate Debtor and its subsidiary. The Corporate Debtor was facing financial difficulties and had defaulted on loan payments to SBI and other creditors. The Financial Creditor disbursed funds to the Corporate Debtor between 22.08.2013 and 04.09.2014. The Corporate Debtor allegedly did not proceed to negotiate a

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## Issues and analysis

### Issue 1: Whether the unpaid amount claimed by the Applicant/Financial Creditor from the Corporate Debtor …

**Ratio:** The legal principle applied is the definition of 'Financial Debt' under Section 5(8) of

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**Reasoning:** The court reasoned that the money infused by the Financial Creditor into the Corporate

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**Interpretation:** The court interpreted 'Financial Debt' broadly, relying on the NIKHIL MEHTA'S

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**Application:** The court applied the definition of 'Financial Debt' to the facts, noting that

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## Parties

- **Judges:** Ch. Mohd Sharief…
- **Appellants:** Val-Met Engineerin…
- **Respondents:** Trusted Aerospace…

## Timeline

- **2013-08-20 — MoU Exec…**: Memorandum of Understanding (MoU) was entered into between the Corporate Debtor and the…
- **2013-08-22 — Disbursemen…**: The Financial Creditor started…

## 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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