# In the matter of Futuristics Garments Private Limited

> NCLT judgment dated 2024-09-06. Citation: TCN-2024-NCLT-00657. Creative Capital Services Ltd. filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 6 Sept 2024
- **Citation:** TCN-2024-NCLT-00657
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/futuristics-garments-private-limited-8cd945bb

## Summary

### Background

Creative Capital Services Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Futuristics Garments Pvt. Ltd. The application pertains to a financial debt arising from a transaction where Creative Capital Services Ltd. (the Financial Creditor) sold shares of Emsons Organic Limited to Futuristics Garments Pvt. Ltd. (the Corporate Debtor). The Corporate Debtor failed to adhere to the repayment schedule outlined in the loan agreement, leading to the declaration of the account as a Non-Performing Asset (NPA). The Financial Creditor issued demand notices and invoked the corporate guarantee.

## Facts

Creative Capital Services Ltd. (Financial Creditor) owned 1885095 equity shares of Emsons Organic Limited. In January-February 2012, Futuristics Garments Pvt. Ltd. (Corporate Debtor) purchased these shares for INR 8,48,29,275. An agreement was executed in 2012 to secure the repayment, which was later modified in 2014, converting the consideration amount into a mortgage loan. The Corporate Debtor defaulted on the repayment schedule from 01.04.2015, leading to the account being declared an NPA on 31.12.2015. The Corporate Debtor acknowledged the outstanding balance of INR 8,50,00,000 in subsequent letters. The Financial Creditor issued a demand notice on 19.08.2022 and invoked personal guarantees provided by Mr. Rajiv Goyal and Ms. Alka Goyal, as well as a corporate

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## Issues and analysis

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

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate the Corporate Insolvency

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**Reasoning:** The court relied on the Corporate Debtor's admission of debt and default, as well as the

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**Interpretation:** Section 7 of the IBC is interpreted to mean that if a financial creditor

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**Application:** In this case, the Corporate Debtor admitted to a debt of Rs. 8.5 crores plus

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## Parties

- **Judges:** SH. ASHOK KUMAR…; SH. SUBRATA KUMAR…
- **Appellants:** Creative Capital…
- **Respondents:** Futuristics…

## Timeline

- **2012-01-01 — Share Purchase…**: Corporate Debtor purchased shares of Emsons…
- **2014-12-18 — Loan Agre…**: Loan agreement executed 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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