# In the matter of Veera Precicast Private Limited CP (IB) No. 648-07-HDB-2019

> NCLT judgment dated 2020-09-21. Citation: TCN-2020-NCLT-00562. Azad Engineering Private Limited filed a petition against Veera Precicast Private Limited under…

- **Court:** NCLT
- **Order date:** 21 Sept 2020
- **Citation:** TCN-2020-NCLT-00562
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/veera-precicast-private-limited-cp-ib-no-648-07-hdb-2019-76bd16ec

## Summary

### Background

Azad Engineering Private Limited filed a petition against Veera Precicast Private Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Corporate Debtor was in the process of reorganization and approached the Financial Creditor. Both parties signed a Memorandum of Understanding (MoU) on 2018-10-10, contemplating the terms and conditions of a takeover. The Financial Creditor transferred ₹1,09,45,500 to the Directors/Shareholders of the Corporate Debtor as per clause 4 of the MoU. The Corporate Debtor allegedly violated the conditions of the MoU and failed to clear its liabilities. The Financial Creditor issued a demand notice on 2019-06-14, asking

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## Facts

Azad Engineering Private Limited (Financial Creditor) filed a petition against Veera Precicast Private Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor, undergoing reorganization, approached the Financial Creditor, leading to a Memorandum of Understanding (MoU) on 2018-10-10 for a potential takeover. As per clause 4 of the MoU, the Financial Creditor transferred ₹1,09,45,500 to the Directors/Shareholders of the Corporate Debtor. The Corporate Debtor allegedly violated the MoU's conditions and failed to clear its liabilities. The Financial Creditor issued a demand notice on 2019-06-14, seeking cancellation of the MoU and repayment of ₹1,20,23,062 (including interest). The Corporate Debtor accepted the

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## Issues and analysis

### Issue 1: Whether the amounts advanced by the Applicant under the MoU qualify as a Financial Debt under …

**Ratio:** A 'financial debt' means a debt along with interest, if any, which is disbursed against

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**Reasoning:** The Adjudicating Authority considered the definition of 'financial debt' under Section

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**Interpretation:** The term 'financial debt' is broadly defined under the IB Code to include

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**Application:** In this case, the Adjudicating Authority found that the amounts advanced by the

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## Parties

- **Judges:** Shri. K. Anantha…; BINOD KUMAR…
- **Appellants:** M/s. Azad…
- **Respondents:** M/s. Veera…

## Timeline

- **2018-10-10 — MoU Sign…**: Memorandum of Understanding signed between Azad Engineering Private Limited and Veera…
- **2019-02-13 — Email by Corporate…**: Email from Corporate Debtor admitting that the amount paid by the Financial Creditor will…

## 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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