# In the matter of Vardhman Estates and Developers Private Limited C.P. No. IB-1555(PB)-2018

> NCLT judgment dated 2019-03-19. Citation: TCN-2019-NCLT-04385. Mrs. Kaushalya Ahluwalia, claiming to be a 'Financial Creditor', filed an application under…

- **Court:** NCLT
- **Order date:** 19 Mar 2019
- **Citation:** TCN-2019-NCLT-04385
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vardhman-estates-and-developers-private-limited-cp-no-ib-1555pb-2018-8761112c

## Summary

### Background

Mrs. Kaushalya Ahluwalia, claiming to be a 'Financial Creditor', filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Vardhman Estates and Developers Private Limited. This is the second round of litigation between the parties, with a previous petition (C.P. (IB) No. 337/2018) having been withdrawn following a settlement. The corporate debtor was incorporated on 24.09.1996. The petitioner claims that a sum of Rs. 77,00,000/- was lent to the corporate debtor, secured by collateral property and post-dated cheques. The corporate debtor initially paid interest but later defaulted. Despite requests and reminders, the loan was not repaid, nor was the collateral property

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## Facts

Mrs. Kaushalya Ahluwalia claimed to be a financial creditor and filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Vardhman Estates and Developers Private Limited. The corporate debtor was incorporated on 24.09.1996. The petitioner lent Rs. 47,00,000/- in cash and Rs. 30,00,000/- via demand draft, totaling Rs. 77,00,000/-, to the corporate debtor, as per an agreement dated 18.08.2014. The loan was to be repaid by 18.08.2015 with 28% annual interest, payable quarterly. The loan was secured by collateral property (unit Nos. 557 & 558) and post-dated cheques. The corporate debtor paid interest for the first three quarters but defaulted on the fourth. Two extension

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## Issues and analysis

### Issue 1: Whether the requirements of Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP if a default has

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**Reasoning:** The tribunal found that a default amounting to a crore of rupees had occurred, the

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger CIRP when

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**Application:** The tribunal applied Section 7 to the facts, noting the default, the

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## Parties

- **Judges:** M. M. K…; Pradeep R.…
- **Appellants:** Kaushalya…
- **Respondents:** Vardhman Estates…

## Timeline

- **1996-09-24 — Incorporation of…**: Vardhman Estates and Developers…
- **2014-08-18 — Loan Agre…**: Loan agreement executed between Mrs. Kaushalya Ahluwalia and Vardhman Estates and…

## 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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