# In the matter of Essel Corporate Resources Private Limited

> NCLT judgment dated 2024-08-13. Citation: TCN-2024-NCLT-00805. STCI Finance Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 13 Aug 2024
- **Citation:** TCN-2024-NCLT-00805
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/essel-corporate-resources-private-limited-76a3240f

## Summary

### Background

STCI Finance Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Essel Corporate Resources Private Limited. The petition was based on a financial debt of Rs. 107,59,58,558/-, comprising a principal amount of Rs. 71,57,70,194/- and interest of Rs. 36,01,88,364/-. The date of default was claimed to be 01.01.2020. The Financial Creditor sanctioned a Corporate Loan of Rs. 125 crores to the Corporate Debtor, with a Letter of Intent (LOI) issued outlining the terms and conditions. The loan was secured by collateral of Liquid Securities and Share Pledge Agreements executed by Third Party Security Providers. Disputes arose regarding the maintenance of asset

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## Facts

On December 7, 2017, Essel Corporate Resources Private Limited (the Respondent) applied for a Corporate Loan. STCI Finance Limited (the Petitioner) sanctioned a Corporate Loan of Rs.125,00,00,000/- to the Respondent, as evidenced by a Letter of Intent (“LOI”) dated March 1, 2018. The loan carried an interest rate of 9.25% per annum, payable quarterly, with bullet repayment due after 36 months. The Petitioner disbursed Rs. 50 crores on March 19, 2018, and Rs. 75 crores on March 31, 2018, totaling Rs. 125 crores. Share Pledge Agreements were executed by Third Party Security Providers on March 14, 2018. The Respondent failed to maintain the required Asset cover, leading the Petitioner to request additional security. A Supplemental LOI was executed on January 7, 2019,

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## Issues and analysis

### Issue 1: Whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 is maintainable …

**Ratio:** A petition under Section 7 of the IBC requires a valid cause of action, which arises when

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**Reasoning:** The Tribunal found that the Financial Creditor had sufficient funds from the sale of

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**Interpretation:** A cause of action exists when the debtor fails to meet its payment obligations

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**Application:** In this case, the Tribunal determined that the Financial Creditor had enough

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## Parties

- **Judges:** Reeta K…; Madhu S…
- **Appellants:** STCI Finance…
- **Respondents:** Essel Corporate…

## Timeline

- **2017-12-07 — Application for…**: Essel Corporate Resources Private…
- **2018-03-01 — Letter of Inte…**: STCI Finance Limited issued a Letter of Intent…

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