# In the matter of CHEMSTAR ORGANICS (INDIA) LIMITED

> NCLT judgment dated 2025-02-20. Citation: TCN-2025-NCLT-00459. The case involves a petition filed by Omkara Asset Reconstruction Private Limited (the…

- **Court:** NCLT
- **Order date:** 20 Feb 2025
- **Citation:** TCN-2025-NCLT-00459
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/chemstar-organics-india-limited-9deef3be

## Summary

### Background

The case involves a petition filed by Omkara Asset Reconstruction Private Limited (the Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Chemstar Organics (India) Limited (the Corporate Debtor). The Corporate Debtor had availed credit facilities from Gujarat Industrial Investment Corporation Limited (GIIC) and defaulted on repayments. GIIC assigned its loan to Omkara Asset Reconstruction Private Limited. A One Time Settlement (OTS) was proposed and partially executed, but disputes arose regarding interest payments and the revocation of the OTS. The Financial Creditor claimed default, while the Corporate Debtor argued that the default fell within the prohibited period under

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## Facts

Chemstar Organics (India) Limited (Corporate Debtor) availed credit facilities of Rs. 5 crores from Gujarat Industrial Investment Corporation Limited (GIIC) under a loan agreement dated 06.10.1997. The loan was to be repaid in 20 equal quarterly installments of Rs. 15 lakhs. A supplemental loan agreement was executed on 18.07.1998, where GIIC cancelled and recalled Rs. 2 crores out of Rs. 5 crores, keeping the repayment period the same for the remaining amount of Rs. 3 crores. GIIC, in consortium with Bank of Baroda, sanctioned and disbursed term loan facilities of Rs. 2 crores and Rs. 1.95 crores. A joint Equitable Mortgage was created in favor of GIIC and Bank of Baroda on 28.07.1998 and 01.07.1999. The Corporate Debtor defaulted in repayment, and the account was

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## Issues and analysis

### Issue 1: Whether the Financial Creditor is entitled to file the present proceedings as per Clause 2 of the …

**Ratio:** The court determined that the assignment of debt from GIIC to the Financial Creditor was

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**Reasoning:** The court noted that the Corporate Debtor was a party and signatory to the assignment

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**Interpretation:** The court interpreted the assignment deed as transferring all rights and

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**Application:** The court applied the ratio to the facts of the case and concluded that the

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## Parties

- **Judges:** LAKSHMI G…; Charanjeet Singh…
- **Appellants:** Omkara Assets…
- **Respondents:** Chemstar Organics…

## Timeline

- **1997-10-06 — Loan Agre…**: Chemstar Organics (India) Limited availed credit facilities of Rs. 5 crores from Gujarat…
- **1998-07-18 — Supplemental Loan…**: GIIC cancelled and recalled Rs. 2 crores out of Rs. 5 crores, keeping the repayment…

## 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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