# In the matter of Aegis Forging Limited C.P.(IB)-1190(MB)-2021

> NCLT judgment dated 2022-06-09. Citation: TCN-2022-NCLT-02317. The case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code (IBC)…

- **Court:** NCLT
- **Order date:** 9 Jun 2022
- **Citation:** TCN-2022-NCLT-02317
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/aegis-forging-limited-cpib-1190mb-2021-1441cac8

## Summary

### Background

The case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) for the initiation of the Corporate Insolvency Resolution Process (CIRP) by Mr. Shaikh Mohammad Tariq against Aegis Forging Ltd. The Financial Creditor, Mr. Tariq, had provided a personal guarantee to the creditors/investors of Aegis Forging Ltd. for funds taken to purchase land and building. The Corporate Debtor allegedly failed to provide a cash security as assured to the Financial Creditor, even after an extension of time was granted. An arbitrator had passed an award directing the Corporate Debtor to pay cash security with accrued interest. The Financial Creditor issued letters demanding the amount as per the arbitration award.

## Facts

In June 2013, Shaikh Mohammad Tariq (Financial Creditor) entered into an agreement with Aegis Forging Limited (Corporate Debtor) where the Financial Creditor provided a personal guarantee to the Corporate Debtor's creditors/investors for funds used to purchase land and building. The Corporate Debtor assured the Financial Creditor that it would provide cash security along with interest if the personal guarantee was not relieved. The Corporate Debtor failed to provide the agreed cash security, even after an extension was granted. An arbitrator passed an award on 2013-11-11, directing the Corporate Debtor to pay cash security of Rs. 3,64,58,785 with accrued interest. The Financial Creditor issued letters on 2021-08-27 demanding the amount as per the arbitration award. The

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## Issues and analysis

### Issue 1: Whether the Petitioner can be considered as a Financial Creditor under Section 7 of the IBC, 2016, …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a corporate

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**Reasoning:** The court found that there was no merit to consider the petitioner as a Financial

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**Interpretation:** The interpretation of Section 7 of the IBC requires the existence of a

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**Application:** In this case, the court determined that the facts did not demonstrate a

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## Parties

- **Judges:** RAJESH S…; KISHORE VEMULAPALL…
- **Appellants:** Shaikh Mohammad…
- **Respondents:** Aegis Forgi…; Aegis Forging…

## Timeline

- **2013-06-01 — Agreement…**: The Financial Creditor entered into an agreement with the Corporate Debtor where the…
- **2013-11-11 — Arbitration…**: The Sole Arbitrator passed an award directing the Corporate Debtor to pay cash security…

## 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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