# In the matter of Arjun Chemicals Private Limited CP-IB-305-2021

> NCLT judgment dated 2022-11-09. Citation: TCN-2022-NCLT-00515. State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 9 Nov 2022
- **Citation:** TCN-2022-NCLT-00515
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/arjun-chemicals-private-limited-cp-ib-305-2021-709c185f

## Summary

### Background

State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Arjun Chemicals (P) Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The application was based on a default in loan repayment. The Financial Creditor, State Bank of India, claimed that a sum of Rs.47.40 crores was sanctioned to the Corporate Debtor in 2018, with an outstanding loan of Rs.56,32,52,142.22 as of 30.06.2021. Several hearings took place, during which settlement talks were underway. The Corporate Debtor proposed a One Time Settlement (OTS), which was initially accepted in principle by the Financial Creditor. The Corporate Debtor also paid Rs. 2 crores towards the settlement. However, the matter was prolonged, and the

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## Facts

State Bank of India (SBI), the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Arjun Chemicals (P) Limited, the Corporate Debtor, seeking initiation of Corporate Insolvency Resolution Process (CIRP). SBI claimed that Rs.47.40 crores was sanctioned to Arjun Chemicals in 2018, with an outstanding loan of Rs.56,32,52,142.22 as of 30.06.2021. Notice was issued on 16.12.2021, and the matter was heard on 10.01.2022. Settlement talks were underway, and Arjun Chemicals proposed a One Time Settlement (OTS), which SBI initially accepted in principle. Arjun Chemicals paid Rs. 2 crores towards the OTS. SBI accepted the OTS on 30.11.2021. Arjun Chemicals paid Rs.2 crores on 30.09.2022 and Rs.8 crores on 15.10.2022. SBI

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## Issues and analysis

### Issue 1: Whether the Financial Creditor's application under Section 7 of the Insolvency and Bankruptcy Code, …

**Ratio:** The legal principle is that if a settlement has been reached between the parties and the

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**Reasoning:** The Tribunal reasoned that the Financial Creditor had accepted the OTS and received

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**Interpretation:** The interpretation is that the existence of a valid OTS and payments made

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**Application:** In this case, the Tribunal applied the principle by holding that the Financial

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## Parties

- **Judges:** Ramalingam…; SAMEER…
- **Appellants:** State Bank of…
- **Respondents:** Arjun Chemicals…

## Timeline

- **2018-01-01 — Loan San…**: Rs.47.40 crores was sanctioned by the…
- **2021-06-30 — Outstandin…**: The outstanding loan…

## 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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