# In the matter of Vardhman Chemtech Ltd. CP (IB) No. 02-Chd-CHD-2018

> NCLT judgment dated 2018-09-25. Citation: TCN-2018-NCLT-00724. Allahabad Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to…

- **Court:** NCLT
- **Order date:** 25 Sept 2018
- **Citation:** TCN-2018-NCLT-00724
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vardhman-chemtech-ltd-cp-ib-no-02-chd-chd-2018-fb2b02f2

## Summary

### Background

Allahabad Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Vardhman Chemtech Limited, claiming default on loan/credit facilities. The bank sought to recover outstanding dues, including principal, interest, and expenses. The corporate debtor raised objections regarding the maintainability of the application, completeness of the form, and the validity of the default notice.

## Facts

Allahabad Bank, the financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against Vardhman Chemtech Limited, the corporate debtor. The corporate debtor had availed loan/credit facilities from the financial creditor, and the account was restructured on 29.03.2014. The financial creditor claimed a default of ₹83,10,72,467.80 as on 31.10.2017, inclusive of interest and expenses. The corporate debtor raised objections regarding the maintainability of the application, completeness of Form 1, and the validity of the default notice. The financial creditor issued a demand notice on 12.09.2017, stating the outstanding amount and calling upon the corporate debtor to discharge the liability. The account was classified

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## Issues and analysis

### Issue 1: Whether a default has …

**Ratio:** A default occurs when a debt is due and payable but is not paid by the debtor. Section 7

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**Reasoning:** The NCLT considered the loan agreements, account statements, and demand notices to

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**Interpretation:** The term 'default' under Section 3(12) of the IBC means non-payment of debt

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**Application:** The NCLT found that the corporate debtor had failed to repay the outstanding

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## Parties

- **Judges:** R.P.Nag…; Pradeep R.…
- **Appellants:** Allahabad…
- **Respondents:** Vardhman Chemtech…; M/s. Vardhman…

## Timeline

- **2014-03-29 — Restructuring o…**: The account of the corporate…
- **2016-07-21 — SARFAESI…**: A notice under Section 13(2) of the…

## 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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