# In the matter of Bansal Oil Extraction Pvt. Ld. C.P. (IB) No. 882-KB-2019

> NCLT judgment dated 2022-05-10. Citation: TCN-2022-NCLT-02792. The case involves an application filed by Union Bank of India under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 10 May 2022
- **Citation:** TCN-2022-NCLT-02792
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bansal-oil-extraction-pvt-ld-cp-ib-no-882-kb-2019-ea31338d

## Summary

### Background

The case involves an application filed by Union Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Bansal Oil Extraction Pvt. Ltd. The Financial Creditor had sanctioned credit facilities to the Corporate Debtor, which the Corporate Debtor failed to maintain as per the terms and conditions, leading to the account being classified as NPA. The Financial Creditor then filed an application for recovery of debts before DRT-III Kolkata. The Corporate Debtor acknowledged its liability in its financial statements and through One Time Settlement proposals, which were rejected by the Financial Creditor.

## Facts

Union Bank of India, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Bansal Oil Extraction Pvt. Ltd., the Corporate Debtor. The Financial Creditor had sanctioned a term loan of Rs.4.30 Crores and a cash credit limit of Rs.16 Crore to the Corporate Debtor in March 2010. These facilities were renewed and enhanced over time, with the last sanction made in March 2014 and the fresh loan disbursed on March 31, 2014. The Corporate Debtor failed to maintain the accounts as per the terms and conditions, leading to the account being classified as NPA on October 16, 2014. The Financial Creditor filed an application before DRT-III Kolkata for recovery of

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The Adjudicating Authority considered the pleadings of the parties and the documents

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**Interpretation:** Section 7 of the IBC provides the mechanism for a financial creditor to trigger

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**Application:** The Adjudicating Authority found that the Financial Creditor had demonstrated a

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## Parties

- **Judges:** RohitKa…; Harish Chan…
- **Appellants:** Union Bank of…
- **Respondents:** Bansal Oil…

## Timeline

- **2010-03-01 — Sanction of T…**: Financial Creditor sanctioned term loan account in favour of the Corporate Debtor to the…
- **2010-03-24 — Enhancement of Credit…**: Financial Creditor enhanced the credit facilities in respect of the cash credit limit of…

## 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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