# In the matter of Cygnus Splendid Limited

> NCLT judgment dated 2023-07-26. Citation: TCN-2023-NCLT-02333. Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 26 Jul 2023
- **Citation:** TCN-2023-NCLT-02333
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/cygnus-splendid-limited-36ef93d5

## Summary

### Background

Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against Cygnus Splendid Limited, the Corporate Debtor, for defaulting on a term loan and cash credit facility. The loan facilities, initially granted to a partnership firm under the same name, were revised and sanctioned to the Corporate Debtor after its incorporation. The Corporate Debtor failed to maintain financial discipline, leading to the classification of the loan accounts as Non-Performing Assets (NPA). The bank initiated recovery proceedings, including filing an O.A. before the Debt Recovery Tribunal (DRT) and issuing a demand notice under the SARFAESI Act, 2002. The Corporate Debtor acknowledged its liabilities through various OTS proposals but failed to

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## Facts

Bank of Baroda sanctioned a term loan facility of Rs. 9.50 Crores and a cash-credit facility of Rs. 3.64 Crores to Cygnus Splendid Limited. The loan was initially given to a partnership firm, 'M/s Cygnus Splendid', and later revised/sanctioned to the Corporate Debtor in January 2014. The loan accounts were classified as NPA on 13.03.2017 due to the Corporate Debtor's failure to maintain financial discipline and default in payments. The bank filed O.A. No. 615 of 2017 before the DRT for recovery of Rs. 7,85,62,274/-. A demand notice was issued on 06.05.2017 under Section 13(2) of the SARFAESI Act, 2002. The bank took symbolic possession of secured immovable properties on 13.09.2017. The Corporate Debtor made OTS proposals between 05.09.2019 and 03.11.2020, acknowledging

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## Issues and analysis

### Issue 1: Whether the petition filed by Bank of Baroda under …

**Ratio:** The pendency of recovery proceedings or commercial suits does not bar the admission of an

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**Reasoning:** The Adjudicating Authority relied on the principle of stare decisis, stating that the

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**Interpretation:** The pendency of other legal proceedings does not preclude the initiation of

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**Application:** The Corporate Debtor's argument that the petition was not maintainable due to

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## Parties

- **Judges:** SH. ASHOK KUMAR…; SH. L. N.…
- **Appellants:** Bank of B…
- **Respondents:** Cygnus Splendid…

## Timeline

- **2012-10-11 — Sanction…**: Bank of Baroda sanctioned term loan and cash…
- **2014-01-01 — Incorporation of…**: Partnership firm informed the Petitioner about the incorporation of Cygnus Splendid…

## 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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