# In the matter of Fact-RCF Building Products Limited

> NCLT judgment dated 2024-01-11. Citation: TCN-2024-NCLT-03155. The case involves an application filed by Omkara Asset Reconstruction Pvt Ltd under Section 7…

- **Court:** NCLT
- **Order date:** 11 Jan 2024
- **Citation:** TCN-2024-NCLT-03155
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/fact-rcf-building-products-limited-18dae123

## Summary

### Background

The case involves an application filed by Omkara Asset Reconstruction Pvt Ltd under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, FACT-RCF Building Products Ltd. The original Financial Creditor, New India Cooperative Bank Ltd., had sanctioned a term loan of Rs. 24 crores to the Corporate Debtor, which was later restructured, increasing the total debt to Rs. 29.75 crores. The Corporate Debtor created pari passu security on plant and machinery and equitable mortgage on land in favor of the Assignor. Due to irregular loan repayments, the account was classified as NPA on 31.07.2016. The Assignor assigned the loan to the Financial Creditor on 31.03.2018. The Corporate Debtor

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## Facts

Omkara Asset Reconstruction Pvt Ltd filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against FACT-RCF Building Products Ltd. The original Financial Creditor, New India Cooperative Bank Ltd., sanctioned a term loan of Rs. 24 crores to the Corporate Debtor on 17.07.2009. This loan was restructured on 29.06.2013, increasing the debt to Rs. 29.75 crores. The Corporate Debtor provided security on plant and machinery and equitable mortgage on land. The account was classified as NPA on 31.07.2016 due to irregular loan repayments. The loan was assigned to Omkara Asset Reconstruction Pvt Ltd on 31.03.2018. The Corporate Debtor proposed two OTS on 20.09.2019 and 01.10.2019, which were rejected. The debt is acknowledged in the

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## Issues and analysis

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

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The court found that the Corporate Debtor had defaulted on its financial debt, and the

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The court applied Section 7 to the facts of the case, finding that the

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## Parties

- **Judges:** Shyam Babu…; T Krishna…
- **Appellants:** Omkara Asset…
- **Respondents:** FACT-RCF BUILDING…

## Timeline

- **2009-07-17 — Term Loan San…**: New India Cooperative Bank Ltd. sanctioned a term loan of Rs. 24 crores to FACT-RCF…
- **2013-06-29 — Loan Restru…**: The term loan was restructured,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(7) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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