# In the matter of V Hotels Limited CP No. 532-IBC-NCLT-MB-MAh-2018

> NCLT judgment dated 2019-05-31. Citation: TCN-2019-NCLT-03115. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 31 May 2019
- **Citation:** TCN-2019-NCLT-03115
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/v-hotels-limited-cp-no-532-ibc-nclt-mb-mah-2018-62da5241

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Asset Reconstruction Company (India) Limited (Financial Creditor) against V Hotels Limited (Corporate Debtor). The Financial Creditor is the assignee of Bank of India, one of the original lenders. The Corporate Debtor had entered into an ECB arrangement with Abu Dhabi Commercial Bank (ADCB) to repay the loan under the Loan Agreement. Subsequently, the bank guarantee issued by Bank of India was invoked by ADCB, and Bank of India made payment. The Financial Creditor submitted that the Corporate Debtor defaulted in payment of principal and interest, leading to the account being classified as a Non-Performing Asset. Settlement talks were initiated, and payments were

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## Facts

The Financial Creditor, Asset Reconstruction Company (India) Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor, V Hotels Limited. The Financial Creditor is the assignee of Bank of India, one of the original lenders. A loan was sanctioned to the Corporate Debtor by a consortium of banks led by Bank of India. The Corporate Debtor entered into an ECB arrangement with Abu Dhabi Commercial Bank (ADCB) to repay the loan. Bank of India issued a bank guarantee that was later invoked by ADCB, leading to a payment by Bank of India. The Corporate Debtor defaulted on payments, and the account was classified as a Non-Performing Asset (NPA) on 01.12.2008. Settlement talks occurred, but the settlement was revoked

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## Issues and analysis

### Issue 1: Whether the claim can be based …

**Ratio:** A claim cannot arise out of an unenforceable settlement agreement, as per the Hon'ble

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**Reasoning:** The Corporate Debtor had acknowledged its liability before entering into the settlement.

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**Interpretation:** The court interprets that while a settlement agreement itself may not be

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**Application:** Even though the settlement agreement was revoked, the Corporate Debtor's prior

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** Asset Reconstructi…
- **Respondents:** V Hotels L…

## Timeline

- **2002-03-08 — Loan Agre…**: A loan was sanctioned to the Corporate Debtor by a consortium of banks led by Bank of…
- **2003-06-05 — ECB Arran…**: The Corporate Debtor entered into an ECB arrangement for USD 29,000,000/- with Abu Dhabi…

## 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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