# In the matter of Varia Aluminium Pvt. Ltd. CP (IB) No. 128-7-NCLT-AHM-2017

> NCLT judgment dated 2017-11-20. Citation: TCN-2017-NCLT-00173. Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 20 Nov 2017
- **Citation:** TCN-2017-NCLT-00173
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/varia-aluminium-pvt-ltd-cp-ib-no-128-7-nclt-ahm-2017-5a481557

## Summary

### Background

Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Varia Aluminium Pvt. Ltd. to initiate Corporate Insolvency Resolution Process (CIRP). Bank of Baroda had sanctioned various credit facilities to Varia Aluminium, including rupee term loans and cash credit facilities. The corporate debtor defaulted on these facilities, leading to the account being classified as NPA. The bank issued notices under SARFAESI Act and sought to initiate CIRP.

## Facts

Bank of Baroda (BOB) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Varia Aluminium Pvt. Ltd. seeking to initiate Corporate Insolvency Resolution Process (CIRP). BOB had sanctioned various credit facilities to Varia Aluminium, including a rupee term loan facility of Rs. 50 crore and a cash credit facility of Rs. 60 crore. The total debt granted to the Corporate Debtor was Rs. 127,92,00,000. The Corporate Debtor defaulted on these facilities, with the account being classified as NPA on June 30, 2016, effective from March 30, 2015. The total amount in default as of June 30, 2017, was Rs. 143,79,57,715.22. BOB issued a notice under Section 13(2) of the SARFAESI Act on October 6, 2016, recalling the entire outstanding loan amount.

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## Issues and analysis

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

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

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had committed default in

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

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**Application:** The Adjudicating Authority applied Section 7 to the facts of the case, finding

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## Parties

- **Judges:** BIKKI RAVEENDRA…
- **Appellants:** Bank of B…
- **Respondents:** Varia Aluminium…

## Timeline

- **2012-01-02 — Sanction L…**: BOB sanctioned facilities to Varia…
- **2013-07-03 — Sanction L…**: BOB sanctioned facilities to Varia…

## 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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