# In the matter of A.ES Engineers Private Limited IB-706-ND-2021

> NCLT judgment dated 2022-10-04. Citation: TCN-2022-NCLT-00848. UGRO Capital Limited filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 4 Oct 2022
- **Citation:** TCN-2022-NCLT-00848
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/aes-engineers-private-limited-ib-706-nd-2021-b17ac6e5

## Summary

### Background

UGRO Capital Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against A.ES Engineers Private Limited for an alleged default of Rs. 1,97,27,033 as of November 18, 2021. The Financial Creditor, UGRO Capital Limited, claimed that A.ES Engineers Private Limited defaulted on a Supply Chain Finance loan availed in terms of a Cash Credit Limit/Revolving Loan Facility. The Corporate Debtor contended that there was no direct financial debt from the Financial Creditor, and the transactions were facilitated through Kiran Udyog Private Ltd (KUPL) under a Master Service Agreement (MSA). The Corporate Debtor also argued that the application was barred under Section 10-A of the IBC

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## Facts

UGRO Capital Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against A.ES Engineers Private Limited (Corporate Debtor) for a default of Rs. 1,97,27,033 as of 18.11.2021. The Financial Creditor claimed the Corporate Debtor defaulted on a Supply Chain Finance loan. The Corporate Debtor was introduced to the Financial Creditor by Kiran Udyog Private Ltd (KUPL), with whom the Financial Creditor had a Master Service Agreement (MSA). KUPL has a network of suppliers, including the Corporate Debtor, requiring financial assistance. The Corporate Debtor availed a Supply Chain Finance loan in terms of a Cash Credit Limit/Revolving Loan Facility for invoices

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

**Ratio:** Section 7 of the IBC requires the applicant to establish a financial debt and a default

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**Reasoning:** The Tribunal considered the documents filed by both parties and the arguments made by the

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**Interpretation:** The Tribunal interpreted Section 7 of the IBC to mean that the applicant must

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**Application:** The Tribunal found that the documents submitted by the Financial Creditor and

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## Parties

- **Judges:** P.S.N. P…; RAHUL BHA…
- **Appellants:** UGRO Capital…
- **Respondents:** A.ES Engineers…

## Timeline

- **2019-03-28 — Master Service…**: KUPL and the Financial Creditor…
- **2019-05-01 — Transactions u…**: Transactions took place under…

## 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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