# In the matter of Fairdeal Multifilament Pvt. Ltd. CP (IB) No. 111-NCLT-AHM-2022

> NCLT judgment dated 2023-02-21. Citation: TCN-2023-NCLT-04511. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 21 Feb 2023
- **Citation:** TCN-2023-NCLT-04511
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/fairdeal-multifilament-pvt-ltd-cp-ib-no-111-nclt-ahm-2022-86e3388d

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, by Shree Nakoda Impex (Financial Creditor) against Fairdeal Multifilament Pvt. Ltd. (Corporate Debtor) to initiate the Corporate Insolvency Resolution Process (CIRP). The application was based on the Corporate Debtor's alleged default in paying a financial debt of Rs. 1,73,38,298. The date of default was stated as 11.04.2022. The Financial Creditor claimed to have disbursed an unsecured loan of Rs. 1,64,75,000 to the Corporate Debtor between April 2021 and March 2022, repayable on demand. The Corporate Debtor, in its reply, denied the existence of a financial debt, contending that the amount was towards equity contributions for taking over stakes of certain

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## Facts

Shree Nakoda Impex, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Fairdeal Multifilament Pvt. Ltd., the Corporate Debtor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The basis for the application was the Corporate Debtor's alleged default in paying a financial debt amounting to Rs. 1,73,38,298, with the date of default stated as April 11, 2022. The Financial Creditor claimed to have disbursed an unsecured loan of Rs. 1,64,75,000 to the Corporate Debtor between April 2021 and March 2022, which was repayable on demand. The Corporate Debtor, in its defense, argued that the application was filed with an ulterior motive by the Financial Creditor in connivance with one of its

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## Issues and analysis

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

**Ratio:** Section 7 of the IBC, 2016, allows a financial creditor to initiate CIRP against a

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**Reasoning:** The Adjudicating Authority considered the evidence presented by the Financial Creditor,

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their debts

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**Application:** The Adjudicating Authority found that the Financial Creditor had provided

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## Parties

- **Judges:** Madan B.…; Mr.Kaushalendra…
- **Appellants:** Shree Nakod…
- **Respondents:** Fairdeal Multifila…

## Timeline

- **2022-04-11 — Date of D…**: The date on which the Corporate Debtor…
- **2021-04-01 — Loan Disbursement…**: Start date of the period during which the Financial Creditor disbursed the unsecured loan…

## 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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