# In the matter of ARS ENERGY PRIVATE LTD

> NCLT judgment dated 2025-02-14. Citation: TCN-2025-NCLT-00491. Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 14 Feb 2025
- **Citation:** TCN-2025-NCLT-00491
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ars-energy-private-ltd-4745cd9a

## Summary

### Background

Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against ARS Energy Private Limited, citing a default on financial debt. The corporate debtor, originally ARS Metals Limited, underwent a name change and is engaged in power generation through a coal-fired thermal power plant. The financial creditor claimed a total default amount of Rs. 110,57,11,831.97. The corporate debtor argued that the default was due to force majeure events, including a surge in coal prices and the COVID-19 pandemic, which led to the shutdown of its power plant. The corporate debtor also claimed that the consortium of banks, including Canara Bank, did not consider its restructuring proposals

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## Facts

Canara Bank, a financial creditor, filed an application to initiate CIRP against ARS Energy Private Limited, a corporate debtor involved in power generation. The corporate debtor had approached the financial creditor and other consortium banks for financial assistance, including working capital overdraft, GECL 2.0, and term loans. The total amount claimed by the financial creditor as financial debt was Rs. 110,57,11,831.97. The dates of default for various accounts ranged from September 2022 to October 2022. The corporate debtor argued that it had faced financial difficulties due to force majeure events, including a surge in coal prices and the COVID-19 pandemic, leading to the shutdown of its power plant. The corporate debtor also claimed that the consortium of banks

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## Issues and analysis

### Issue 1: Whether the application filed by Canara Bank under Section 7 of the Insolvency and Bankruptcy Code, …

**Ratio:** The Adjudicating Authority has the power to admit an application under Section 7 of the

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**Reasoning:** The Adjudicating Authority found that Canara Bank had proven the existence of a financial

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

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**Application:** The Adjudicating Authority applied the ratio to the facts of the case and found

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## Parties

- **Judges:** SANJIV…; Venkataraman…
- **Appellants:** Canara…
- **Respondents:** ARS Energy…; ARS Energy…

## Timeline

- **1990-09-19 — Incorporation of ARS…**: ARS Metals Limited was originally incorporated and registered with the Registrar of…
- **2014-12-19 — Demerger of ARS Metals…**: Hon'ble Madras High Court ordered the demerger of ARS Metals Private Limited,…

## 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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