# In the matter of Eternal Motors Pvt. Ltd C.P. (I.B.) No.135-NCLT-AHM-2021

> NCLT judgment dated 2022-08-10. Citation: TCN-2022-NCLT-01403. The case pertains to an application filed by Eternal Motors Pvt Ltd under Section 10 of the…

- **Court:** NCLT
- **Order date:** 10 Aug 2022
- **Citation:** TCN-2022-NCLT-01403
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/eternal-motors-pvt-ltd-cp-ib-no135-nclt-ahm-2021-a6c99a91

## Summary

### Background

The case pertains to an application filed by Eternal Motors Pvt Ltd under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The company claimed inability to pay debts of approximately Rs. 40,11,80,000 to various banks. The date of default was stated as 15.05.2021. Three financial creditors, namely HDFC Bank, IDFC Bank, and PNB Bank, objected to the admission of the application, arguing it was a fraudulent attempt to halt recovery proceedings. The application was filed on 30.07.2021.

## Facts

Eternal Motors Pvt Ltd filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The company claimed inability to pay debts of approximately Rs. 40,11,80,000 to various banks, with the date of default stated as 15.05.2021. The company's net worth was reported as negative (-9,74,99,002/- as on 30.06.2021). Three financial creditors, HDFC Bank, IDFC Bank, and PNB Bank, objected to the admission of the application, alleging fraudulent initiation of CIRP to halt recovery proceedings. HDFC Bank had issued a notice under Section 13(2) of the SARFAESI Act, 2002, on 18.12.2021, after the CIRP application was filed on 30.07.2021. SBI had served a notice of default on 28.05.2021, three

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## Issues and analysis

### Issue 1: Whether the application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016, by the …

**Ratio:** Section 10 of the Insolvency and Bankruptcy Code, 2016, allows a Corporate Person to

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**Reasoning:** The Adjudicating Authority considered the application and found that the Corporate Person

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**Interpretation:** Section 10 provides a mechanism for a Corporate Person facing financial

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**Application:** In this case, the Adjudicating Authority found that the application met the

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## Parties

- **Judges:** Madan B.…; KAUSHALENDRA…
- **Respondents:** Eternal Motors…

## Timeline

- **2021-05-15 — Date of D…**: The date of default for the debt owed by…
- **2021-06-30 — Provisional Balance…**: Date of the provisional balance sheet produced by the Corporate Person, showing a…

## 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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