# In the matter of Tuff Tubes (Orissa) Pvt. Ltd. CP (IB) No. 142-CTB-2020

> NCLT judgment dated 2021-06-09. Citation: TCN-2021-NCLT-01995. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 9 Jun 2021
- **Citation:** TCN-2021-NCLT-01995
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/tuff-tubes-orissa-pvt-ltd-cp-ib-no-142-ctb-2020-8c18e9e1

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Shyamshree Traders (P) Ltd. against Tuff Tubes (Orissa) Pvt. Ltd. for initiating the Corporate Insolvency Resolution Process (CIRP). Tuff Tubes had obtained financial assistance from the Bank of India, Moulali Branch, secured by an equitable mortgage. Due to continuous losses, Tuff Tubes defaulted on repayments, leading to its account being categorized as a Non-Performing Asset (NPA). Negotiations for a One Time Settlement (OTS) ensued. Tuff Tubes approached Shyamshree Traders to sell its plant and machinery. A Memorandum of Understanding (MOU) was entered on 18.09.2018, where Shyamshree Traders agreed to purchase Tuff Tubes' assets. Shyamshree Traders disbursed Rs.

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## Facts

Shyamshree Traders (P) Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Tuff Tubes (Orissa) Pvt. Ltd. Tuff Tubes had taken financial assistance from Bank of India, Moulali Branch, secured by an equitable mortgage. Due to losses, Tuff Tubes defaulted, and its account was classified as NPA. Tuff Tubes and Bank of India negotiated for a One Time Settlement (OTS). Tuff Tubes approached Shyamshree Traders to sell its assets. An MOU was signed on 18.09.2018, where Shyamshree Traders agreed to purchase Tuff Tubes' assets. Shyamshree Traders disbursed Rs. 1,40,49,015/- to Tuff Tubes. The acquisition failed. Shyamshree Traders requested a refund with interest. Tuff Tubes

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## Issues and analysis

### Issue 1: Whether the Financial Creditor can initiate Corporate Insolvency Resolution Process of the …

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

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**Reasoning:** The court examined the records and found that the applicant, Shyamshree Traders, had

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**Interpretation:** Section 7 of the IBC provides the mechanism for a financial creditor to trigger

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**Application:** The court applied the provisions of Section 7 to the facts of the case, noting

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## Parties

- **Judges:** Sucharit…; Satya Ranjan…
- **Appellants:** M/s. Shyamshree…
- **Respondents:** M/s. Tuff Tubes…

## Timeline

- **2018-09-18 — Memorandum of…**: Financial Creditor and Corporate Debtor entered into a Memorandum of Understanding where…
- **2019-03-18 — Letter from Financial…**: Financial Creditor called upon the Corporate…

## 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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