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

> NCLT judgment dated 2022-06-09. Citation: TCN-2022-NCLT-02320. 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-02320
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/aegis-forging-limited-cpib-1190mb-2021-ee8baff7

## Summary

### Background

The case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, by Mr. Shaikh Mohammad Tariq against Aegis Forging Ltd., seeking initiation of the Corporate Insolvency Resolution Process (CIRP). 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 of Rs. 60,00,000/- as assured, and the Sole Arbitrator passed an award directing the Corporate Debtor to pay cash security of Rs.3,64,58,785/- with accrued interest. The Financial Creditor issued letters demanding the amount as per the arbitration award, totaling Rs.5,43,12,602/-.

## Facts

In June 2013, the Financial Creditor, Shaikh Mohammad Tariq, entered into an agreement with the Corporate Debtor, Aegis Forging Limited, to provide 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 a cash security along with interest if it failed to relieve the Financial Creditor of the personal guarantee. The amount of cash security was agreed to be Rs. 60,00,000/-, but the Corporate Debtor failed to provide it, even after the Financial Creditor granted an extension of time. A Sole 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

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## Issues and analysis

### Issue 1: Whether the Petitioner can be considered 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 reasoned that based on the facts of the case, there was no merit to consider

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

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**Application:** The court applied the facts to the requirements of Section 7 and found that the

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## Parties

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

## Timeline

- **2013-06-01 — Agreement between Financial Creditor and…**: The Financial Creditor entered into an agreement with the Corporate Debtor on 2013-06-22,…
- **2013-11-11 — Arbitration…**: The Sole Arbitrator passed an award directing the Corporate Debtor to pay cash security…

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