# In the matter of Agroha Paper Industries Pvt. Ltd.

> NCLT judgment dated 2023-08-22. Citation: TCN-2023-NCLT-01960. Agroha Paper Industries Pvt. Ltd., the Corporate Applicant, filed a petition under Section 10…

- **Court:** NCLT
- **Order date:** 22 Aug 2023
- **Citation:** TCN-2023-NCLT-01960
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/agroha-paper-industries-pvt-ltd-44443b61

## Summary

### Background

Agroha Paper Industries Pvt. Ltd., the Corporate Applicant, filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against itself. The application was filed due to the company's inability to repay its debts, exacerbated by the economic downturn during the COVID-19 pandemic. The Bank of Maharashtra, the Financial Creditor, opposed the petition, alleging that the Corporate Applicant was attempting to stall recovery proceedings and had not approached the Tribunal with clean hands. The Financial Creditor had initiated SARFAESI Act proceedings, including taking possession of mortgaged properties and issuing e-auction sale notices.

## Facts

Agroha Paper Industries Pvt. Ltd. (Corporate Applicant) filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against itself. The company's registered office is located in Lucknow, Uttar Pradesh. The company availed loan facilities from the Bank of Maharashtra (Financial Creditor), including a term loan of Rs. 150 lakhs and a cash credit facility. Due to an economic downturn, the Corporate Applicant defaulted on its loan repayments. The Bank of Maharashtra declared the account as NPA on 28.10.2018. The Financial Creditor issued a demand notice on 11.01.2019 under Section 13(2) of the SARFAESI Act, 2002, for the repayment of Rs. 4,39,55,214 plus interest. The Corporate Applicant sought additional funds or time to repay

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## Issues and analysis

### Issue 1: Whether the Corporate Applicant has …

**Ratio:** The principle of 'clean hands' requires a party seeking equitable relief to have acted

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**Reasoning:** The Tribunal found that the Corporate Applicant had suppressed vital facts and made

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**Interpretation:** The 'clean hands' doctrine is a fundamental principle of equity that prevents a

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**Application:** The Corporate Applicant's efforts to stall recovery proceedings, coupled with

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## Parties

- **Judges:** Ashish…; Praveen…
- **Respondents:** Agroha Paper…; Bank of Maharashtr…

## Timeline

- **2017-06-30 — Sanction…**: Bank of Maharashtra sanctioned term loan of Rs. 150 lakhs and Cash Credit Limited of Rs.…
- **2017-12-18 — Enhanced Cash Credit…**: Bank of Maharashtra enhanced the cash credit limit from Rs. 50 Lakhs to Rs. 275 Lakhs and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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