# In the matter of Visa Drugs & Pharmaceuticals Private Limited C.P. (IB) No. 1239-KB-2018

> NCLT judgment dated 2019-11-08. Citation: TCN-2019-NCLT-00651. This case involves a joint petition filed by Syndicate Bank and Union Bank of India under…

- **Court:** NCLT
- **Order date:** 8 Nov 2019
- **Citation:** TCN-2019-NCLT-00651
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/visa-drugs-pharmaceuticals-private-limited-cp-ib-no-1239-kb-2018-16d335b3

## Summary

### Background

This case involves a joint petition filed by Syndicate Bank and Union Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against M/s. Visa Drugs and Pharmaceuticals Private Limited. The financial creditors claim that the corporate debtor defaulted on its financial obligations. The corporate debtor argued that the application was not maintainable and that there was no proper authorization for initiating the CIRP. The financial creditors contended that the corporate debtor had made representations regarding its business stability and potential, based on which they sanctioned credit facilities. However, the corporate debtor failed to meet its obligations, leading to outstanding

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## Facts

M/s. Syndicate Bank and M/s. Union Bank of India, acting as financial creditors, filed a joint petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Visa Drugs and Pharmaceuticals Private Limited, the corporate debtor. The corporate debtor is engaged in manufacturing medicines and has a factory in Himachal Pradesh and a registered office in Kolkata. In 2016, the corporate debtor approached the financial creditors for various credit facilities, including overdraft, cash credit, term loan, and bank guarantee. The financial creditors sanctioned these facilities based on the representations made by the corporate debtor's directors regarding the business's potential and stability.

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## Issues and analysis

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

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

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**Reasoning:** The court found that the financial creditors had provided sufficient evidence of the debt

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**Interpretation:** Section 7 of the IBC provides the legal basis for a financial creditor to

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**Application:** The court applied Section 7 to the facts of the case, noting that the financial

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## Parties

- **Judges:** Jinan…; Harish Chander…
- **Appellants:** Syndicate…
- **Respondents:** Visa Drugs and…; Visa Drugs and…

## Timeline

- **2016-08-12 — Agreements…**: Working Capital facility agreement, Joint Deed of Hypothecation, Power of Attorney etc.…
- **2018-05-21 — Notice I…**: Financial Creditor No. 1 issued a notice to the Corporate Debtor calling upon them 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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