# In the matter of Ved Cellulose Ltd.

> NCLT judgment dated 2017-06-30. Citation: TCN-2017-NCLT-00771. Reliance Commercial Finance Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 30 Jun 2017
- **Citation:** TCN-2017-NCLT-00771
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ved-cellulose-ltd-842936f7

## Summary

### Background

Reliance Commercial Finance Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Ved Cellulose Limited for initiating the Corporate Insolvency Resolution Process (CIRP). The financial creditor sought to recover a loan amount from the corporate debtor, which had defaulted on its repayment obligations. The debt was originally payable to Reliance Capital Finance Limited and was transferred to Reliance Commercial Finance Limited through a scheme of arrangement sanctioned by the Bombay High Court. The corporate debtor failed to make timely EMI payments, leading to the financial creditor recalling the loan facility.

## Facts

Reliance Commercial Finance Limited (the 'Financial Creditor') filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process against Ved Cellulose Limited (the 'Corporate Debtor'). The Financial Creditor granted a loan of Rs. 1,92,38,526.00 to the Corporate Debtor on 28.03.2014, to be repaid with interest at 16% per annum in 60 EMIs. The Corporate Debtor defaulted on EMI payments, leading the Financial Creditor to recall the loan facility. As of 31.05.2017, a total sum of Rs. 2,01,26,510/- was recoverable. The Financial Creditor was incorporated on 17.08.2000, while the Corporate Debtor was incorporated on 08.03.1995. The debt was originally payable to Reliance Capital Finance Limited and was

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## Issues and analysis

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

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The court found that the financial creditor had disclosed relevant data, including

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**Interpretation:** Section 7 of the IBC provides a mechanism for financial creditors to initiate

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**Application:** In this case, the financial creditor provided evidence of the loan agreement,

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## Parties

- **Judges:** M. M. K…; DeepaKr…
- **Appellants:** Reliance Commercia…
- **Respondents:** Ved Cellulose…

## Timeline

- **2014-03-28 — Loan Gra…**: Reliance Commercial Finance Limited granted a loan of Rs. 1,92,38,526.00 to Ved Cellulose…
- **2014-03-29 — Loan Disb…**: The loan was disbursed to…

## 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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