# In the matter of C M Smith and Sons Ltd.

> NCLT judgment dated 2023-12-13. Citation: TCN-2023-NCLT-00270. Shree Sulphurics Pvt Ltd filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 13 Dec 2023
- **Citation:** TCN-2023-NCLT-00270
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/c-m-smith-and-sons-ltd-095b17f9

## Summary

### Background

Shree Sulphurics Pvt Ltd filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against C M Smith and Sons Ltd, seeking to initiate the Corporate Insolvency Resolution Process (CIRP), appoint an Interim Resolution Professional (IRP), and declare a moratorium. The application was based on a claim that the Corporate Debtor defaulted on a loan of Rs. 3,90,00,000/- advanced by the Financial Creditor. The Corporate Debtor, in its reply, contested the application, alleging that it was filed at the behest of the majority shareholder and constituted an abuse of the process of law. The Corporate Debtor also raised concerns about the locus standi of the applicant and questioned the validity of the debt.

## Facts

On 18.04.2023, Shree Sulphurics Private Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against C M Smith and Sons Ltd, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was based on a claim that the Corporate Debtor defaulted on a loan of Rs. 3,90,00,000/-. The Financial Creditor had advanced this sum to the Corporate Debtor vide a sanction letter dated 01.05.2022, with the Corporate Debtor agreeing to pay interest at 15% per annum and repay the entire amount by 28.02.2023. However, the Corporate Debtor repaid only Rs. 43,40,000/-, leaving an outstanding amount of Rs. 3,46,60,000/- plus interest. The Financial Creditor issued a notice to the Corporate Debtor on 21.03.2023, recalling the

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## Issues and analysis

### Issue 1: Whether the application filed by Shree Sulphurics Private Limited under Section 7 of the Insolvency …

**Ratio:** The maintainability of an application under Section 7 of the IBC depends on the existence

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**Reasoning:** The Tribunal noted the absence of a Board Resolution accepting the loan's terms and a

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**Interpretation:** Section 7 of the IBC requires the existence of a financial debt and a default

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**Application:** In this case, the Tribunal found that the Applicant had not sufficiently

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## Parties

- **Judges:** SHAMMI…; SAMEER…
- **Appellants:** Shree Sulphurics…
- **Respondents:** C M Smith and…

## Timeline

- **2023-04-18 — Application…**: Shree Sulphurics Private Limited filed an application under Section 7 of the Insolvency…
- **2022-05-01 — Sanction…**: Financial Creditor issued a sanction letter for a loan of Rs. 3,90,00,000/- to the…

## 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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