# In the matter of Central Departmental Stores Private Limited

> NCLT judgment dated 2024-09-24. Citation: TCN-2024-NCLT-00565. Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 24 Sept 2024
- **Citation:** TCN-2024-NCLT-00565
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-departmental-stores-private-limited-d48f992c

## Summary

### Background

Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Central Departmental Stores Private Limited, the Corporate Debtor, who acted as a guarantor for a term loan of Rs. 155 Crore sanctioned to Syntex Trading and Agency Private Limited (Principal Borrower). The Principal Borrower defaulted on 30.09.2020, leading to a restructuring agreement. However, the default continued, and the loan account was classified as Non-Performing Asset (NPA) on 30.04.2022. A demand notice was issued on 06.06.2022, but no payments were made, prompting the application for CIRP.

## Facts

Central Bank of India, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against Central Departmental Stores Private Limited, the Corporate Debtor. The Corporate Debtor acted as a guarantor for a term loan of Rs. 155 Crore sanctioned to Syntex Trading and Agency Private Limited (Principal Borrower) on 16.12.2019, formalized through a Term Loan Agreement dated 23.12.2019. The Principal Borrower defaulted on 30.09.2020, leading to a One-Time Restructuring (OTR) request and a subsequent Restructuring Agreement dated 21.06.2021. The default continued, and the loan account was classified as Non-Performing Asset (NPA) on 30.04.2022. A demand notice was issued on 06.06.2022, but no payments were made.

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## Issues and analysis

### Issue 1: Whether the present Application is barred by Section 10A of the Insolvency and Bankruptcy Code, …

**Ratio:** Section 10A of the IBC provides a bar on initiation of CIRP for defaults occurring during

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**Reasoning:** The NCLT dismissed the Corporate Debtor's IA challenging the maintainability of the

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**Interpretation:** Section 10A is interpreted to provide a temporary suspension of CIRP initiation

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**Application:** The NCLT determined that the default occurred outside the period covered by

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## Parties

- **Judges:** K. R. SAJI…; SANJIV…
- **Appellants:** Central Bank of…
- **Respondents:** Central Department…

## Timeline

- **2019-12-16 — Sanction…**: Financial Creditor sanctioned a fresh term loan of Rs.155 Crore to the Principal Borrower…
- **2019-12-23 — Term Loan Ag…**: Financial Creditor entered into a Term 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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