# In the matter of Vajram Spinning Mills Private Limited IBA-763-2019

> NCLT judgment dated 2020-01-30. Citation: TCN-2020-NCLT-02126. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 30 Jan 2020
- **Citation:** TCN-2020-NCLT-02126
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vajram-spinning-mills-private-limited-iba-763-2019-4e759890

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by UCO Bank, the Financial Creditor, against M/s. Vajram Spinning Mills Private Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed a default in repayment of loans granted to the Corporate Debtor.

## Facts

UCO Bank, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Vajram Spinning Mills Private Limited, the Corporate Debtor. The Financial Creditor had granted Cash Credit and Term Loans to the Corporate Debtor on various dates. The Corporate Debtor defaulted in repayment of the loans. The account of the Corporate Debtor was classified as NPA on 06.02.2016. The outstanding balance as on 06.02.2016 was Rs. 5,93,20,988.28. The petition was filed on 28.05.2019, which was beyond the 3 years period of limitation. The Financial Creditor submitted that they had obtained acknowledgment of debt from the Corporate Debtor on 06.01.2018, extending the limitation period. The Financial Creditor also filed their

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, is …

**Ratio:** The Tribunal is bound to admit the application if there is an existence of a 'financial

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**Reasoning:** The Tribunal considered the facts and circumstances of the case and the position of law

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**Interpretation:** Section 7 of the I&B Code allows a financial creditor to initiate CIRP

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**Application:** The Tribunal found that there was a financial debt and default exceeding Rs. 1

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## Parties

- **Judges:** R. VARADH…; Anil Ku…
- **Appellants:** UCO B…
- **Respondents:** M/s. Vajram…; M/s. Vajram…
- **Advocates:** V. Suth…; K.S. Viswa…; +1 more

## Timeline

- **2016-02-06 — Account Classified as…**: The account of the Corporate…
- **2018-01-06 — Acknowledgment…**: The Financial Creditor obtained…

## 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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