# In the matter of Zaveri Constructions Private Limited CP No. 411-I&BC-NCLT-MB-MAH-2019

> NCLT judgment dated 2019-09-26. Citation: TCN-2019-NCLT-01228. Reliance Home Finance Private Limited filed an application under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 26 Sept 2019
- **Citation:** TCN-2019-NCLT-01228
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/zaveri-constructions-private-limited-cp-no-411-ibc-nclt-mb-mah-2019-14f45e42

## Summary

### Background

Reliance Home Finance Private Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Zaveri Constructions Private Limited, claiming default on a financial debt. The financial creditor sought initiation of the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The corporate debtor had taken a construction finance loan from the financial creditor for a project called 'Upakram'. The corporate debtor defaulted in payment of installments, leading to the financial creditor issuing a notice under Section 13(2) of the SARFAESI Act. The NCLT admitted the application, finding that the debt and default were established, and appointed an Interim Resolution Professional (IRP).

## Facts

On 26.02.2009, Upakram Co-Operative Housing Society Limited entered into a Development Agreement with Zaveri Constructions Private Limited (Corporate Debtor) for developing a project called 'Upakram'. In August 2016, the Corporate Debtor approached Reliance Home Finance Private Limited (Financial Creditor) for a construction finance loan of Rs. 10,00,00,000/- to meet the development cost of the project. On 20.09.2016, the Corporate Debtor signed and executed the Application Form for availing the loan facility. On 21.10.2016, the Financial Creditor sanctioned the construction finance loan. On 24.10.2016, a Demand Promissory Note was executed by the Corporate Debtor. On 25.10.2016, an Indenture of Mortgage Deed was registered. The Corporate Debtor defaulted in payment of

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## Issues and analysis

### Issue 1: Whether the debt claimed by the Financial Creditor falls within the definition of 'Financial Debt' …

**Ratio:** Section 5(8) of the IBC defines 'Financial Debt' as a debt along with interest, if any,

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**Reasoning:** The NCLT considered the loan agreement, the demand promissory note, and other documents

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**Interpretation:** The interpretation of 'Financial Debt' under Section 5(8) is broad and includes

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**Application:** In this case, the loan provided by Reliance Home Finance to Zaveri

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## Parties

- **Judges:** M.K. Sh…; Chandra Bha…
- **Appellants:** Reliance Home…
- **Respondents:** Zaveri Constructio…

## Timeline

- **2009-02-26 — Development A…**: Upakram Co-Operative Housing Society Limited entered into a Development Agreement with…
- **2016-08-01 — Loan Appli…**: The Corporate Debtor approached the Financial…

## 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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