# In the matter of Arshiya Limited

> NCLT judgment dated 2024-04-23. Citation: TCN-2024-NCLT-01641. Punjab National Bank filed a Company Petition (CP (IB) No. 3143/MB/2019) under Section 7 of the…

- **Court:** NCLT
- **Order date:** 23 Apr 2024
- **Citation:** TCN-2024-NCLT-01641
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/arshiya-limited-ad9a9625

## Summary

### Background

Punjab National Bank filed a Company Petition (CP (IB) No. 3143/MB/2019) under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Arshiya Limited, the Corporate Debtor. The petition was based on a default of Rs. 193,24,35,349.59 as of 13.08.2019. Arshiya Limited is the holding company of Arshiya Northern FTWZ Limited (ANFL). ANFL had availed loans from Punjab National Bank to construct a Free Trade Warehousing Zone (FTWZ) at Khurja, Uttar Pradesh. These loans were later restructured. The accounts of ANFL became Non-Performing Asset (NPA) on 30.09.2014. Punjab National Bank, as the Financial

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## Facts

Punjab National Bank (PNB), the Financial Creditor (FC), filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against Arshiya Limited, the Corporate Debtor (CD). The alleged default amount was Rs. 193,24,35,349.59 as of 13.08.2019. Arshiya Limited is the holding company of Arshiya Northern FTWZ Limited (ANFL), which is a Free Trade Warehousing Zone (FTWZ) developer. ANFL had availed loans from PNB to construct the FTWZ at Khurja, Uttar Pradesh. These loans were restructured via a Master Restructuring Agreement dated 28.09.2013. The accounts of ANFL became Non-Performing Asset (NPA) on 30.09.2014. PNB issued a notice dated 14.10.2015 under Section 13(2) of the SARFAESI Act to

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## Issues and analysis

### Issue 1: Whether the application filed by Punjab National …

**Ratio:** CIRP can be initiated against both the principal borrower and the corporate guarantor

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**Reasoning:** The NCLT relied on the Hon'ble Supreme Court's decision in SBI Vs. Ramakrishna & Anr.

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**Interpretation:** The legal principle establishes that a creditor can pursue CIRP against both

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**Application:** The NCLT applied this principle to the case, noting that the fact that CIRP had

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## Parties

- **Judges:** K. R. SAJI…; SANJIV…
- **Respondents:** Arshiya L…

## Timeline

- **2013-09-28 — Master Restructuring…**: Loans availed by ANFL from…
- **2014-09-30 — ANFL Account Declared…**: The accounts of Arshiya Northern FTWZ Limited…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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