# In the matter of ADEA Powerquips Private Limited CP (IB) No. 2079-KB-2019

> NCLT judgment dated 2022-08-23. Citation: TCN-2022-NCLT-01304. This case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 23 Aug 2022
- **Citation:** TCN-2022-NCLT-01304
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/adea-powerquips-private-limited-cp-ib-no-2079-kb-2019-87dc35d0

## Summary

### Background

This case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Anup Jhunjhunwala (Financial Creditor) against ADEA Powerquips Private Limited (Corporate Debtor) to initiate the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed that the Corporate Debtor failed to repay a loan of Rs. 29,80,662 along with interest. The Corporate Debtor argued that the loan was converted into equity shares with the consent of the Financial Creditor.

## Facts

Anup Jhunjhunwala, the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against ADEA Powerquips Private Limited, the Corporate Debtor, claiming a default on a loan of Rs. 29,80,662 along with 12% interest per annum from August 16, 2018, to October 17, 2019. The loan was given in installments between August 16, 2018, and January 11, 2019, totaling Rs. 27,00,000. The Financial Creditor was also a shareholder and Managing Director of the Corporate Debtor until September 16, 2019. In December 2018, the Financial Creditor sold some equity shares to Modern Malleables groups. The Corporate Debtor acknowledged the loan but claimed it was converted into equity shares during an Annual General Meeting on September 16, 2019. The

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## Issues and analysis

### Issue 1: Whether the loan given by the Financial Creditor to the Corporate Debtor constitutes a 'debt' and …

**Ratio:** A 'debt' exists when there is a liability or obligation to repay a sum of money. A

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**Reasoning:** The court acknowledged that the Corporate Debtor had admitted to receiving the loan from

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**Interpretation:** The interpretation of 'debt' and 'default' under Section 7 of the IBC requires

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**Application:** In this case, the court found that the loan had been converted into equity

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## Parties

- **Judges:** RohitKa…; Balraj…
- **Appellants:** Anup Jhunjh…
- **Respondents:** ADEA Powerquips…

## Timeline

- **2010-11-18 — Incorporation of…**: ADEA Powerquips Private…
- **2018-08-16 — Loan Disburseme…**: The Financial Creditor disbursed a…

## 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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