# In the matter of Varun Resources Ltd. CP No. 247-(MAH)-2017

> NCLT judgment dated 2017-06-14. Citation: TCN-2017-NCLT-00809. Indian Bank filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 14 Jun 2017
- **Citation:** TCN-2017-NCLT-00809
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/varun-resources-ltd-cp-no-247-mah-2017-1412172f

## Summary

### Background

Indian Bank filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Varun Resources Ltd., alleging failure to repay ₹31,28,56,661 along with interest at 13% per annum, with a default date of 05-01-2014. Varun Shipping, initially engaged in the shipping business, availed a term loan of ₹50 crores from Indian Bank in 2010. Varun Shipping was to repay the loan in 16 quarterly installments after a moratorium period. They also executed a statutory mortgage of their vessel 'Maharishi Mahatreya'. Varun Shipping acknowledged its indebtedness of ₹28,99,63,706 as of 26-06-2013. Subsequently, a Scheme of Arrangement of Amalgamation was approved by the Bombay High Court in 2015, where Varun Resources Ltd. took over the shipping business of

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## Facts

Varun Shipping Company Ltd. (later Varun Shipping) was primarily engaged in the shipping business. Indian Bank sanctioned a term loan of ₹50 crores to Varun Shipping, vide sanction letter dated 30-06-2010. Varun Shipping was to repay the loan in 16 quarterly installments of ₹3,12,50,000 after a moratorium period of 12 months. Varun Shipping executed a statutory mortgage of their vessel 'Maharishi Mahatreya' in favor of Indian Bank. As of 26-06-2013, Varun Shipping acknowledged its indebtedness of ₹28,99,63,706 towards the term loan. The amount became ₹31,28,56,661. A Scheme of Arrangement of Amalgamation was approved by the Bombay High Court on 19-03-2015, where Varun Resources Ltd. took over the shipping business of Varun Shipping. All assets and liabilities of Varun

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** The Adjudicating Authority is not required to look into any other scheme pending,

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**Reasoning:** The Bench noted that while the loan owed to the Financial Creditor was around 1% of the

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**Interpretation:** The existence of a CAP does not bar a financial creditor from initiating

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**Application:** The NCLT found that the existence of a CAP and the small debt percentage of the

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## Parties

- **Judges:** B.S.V. Prakash…; V. Nallasen…
- **Appellants:** Indian Ban…
- **Respondents:** Varun Resources…

## Timeline

- **2010-06-30 — Loan San…**: Indian Bank sanctioned a term loan…
- **2013-06-26 — Acknowledgement of…**: Varun Shipping acknowledged its indebtedness…

## 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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