# In the matter of ETC- Energy Therapy Co. Pvt. Limited CP No. (IB) 904-MB- 2022

> NCLT judgment dated 2023-02-03. Citation: TCN-2023-NCLT-04781. Rajdeep Distributors Private Limited, the Financial Creditor, filed a Company Petition seeking…

- **Court:** NCLT
- **Order date:** 3 Feb 2023
- **Citation:** TCN-2023-NCLT-04781
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/etc-energy-therapy-co-pvt-limited-cp-no-ib-904-mb-2022-deaa170e

## Summary

### Background

Rajdeep Distributors Private Limited, the Financial Creditor, filed a Company Petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against ETC- Energy Therapy Co. Pvt. Limited, the Corporate Debtor, alleging default in payment. The Corporate Debtor was engaged in providing Turnkey Electrical Engineering Systems and allied activities and had obtained unsecured loans. The Financial Creditor agreed to take over the original loans after due diligence. A Loan Agreement was entered into on April 1, 2020, where the Corporate Debtor assigned its original loans to the Financial Creditor. The Corporate Debtor failed to repay the loan, leading to a default on October 1, 2020. The Financial Creditor issued a notice on October 5, 2020, which the Corporate

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## Facts

Rajdeep Distributors Private Limited (Financial Creditor) sought to initiate Corporate Insolvency Resolution Process (CIRP) against ETC- Energy Therapy Co. Pvt. Limited (Corporate Debtor) for defaulting on a financial debt. The Corporate Debtor, engaged in Turnkey Electrical Engineering Systems, had existing unsecured loans amounting to Rs. 9,40,61,587/- as of March 31, 2020. Unable to repay, they sought financial assistance from the Financial Creditor, who agreed to take over the loans after due diligence. A Loan Agreement was executed on April 1, 2020, assigning the original loans to the Financial Creditor. The loan was to be repaid within six months, with the due date being September 30, 2020. The Corporate Debtor defaulted on October 1, 2020. The Financial Creditor

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## Issues and analysis

### Issue 1: Whether the petition filed by the Financial Creditor is maintainable under Section 7 of the …

**Ratio:** Section 10A of the Insolvency and Bankruptcy Code, 2016, suspends the initiation of

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**Reasoning:** The court observed that the date of default, November 20, 2020, fell within the period

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**Interpretation:** Section 10A provides a bar on initiating CIRP for defaults occurring during the

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**Application:** Since the default occurred on November 20, 2020, which is within the period

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## Parties

- **Judges:** P.N. Deshmukh…; Shyam Babu…
- **Appellants:** Rajdeep Distributo…
- **Respondents:** ETC- Energy…
- **Advocates:** Yash Ba…; Prakhar T…

## Timeline

- **2020-03-31 — Outstanding…**: Corporate Debtor had unsecured…
- **2020-04-01 — Loan Agre…**: Loan Agreement entered into between…

## 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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