# In the matter of Golconda Textiles Private Limited CP (IB) No. 94-07-HDB-2022

> NCLT judgment dated 2023-01-24. Citation: TCN-2023-NCLT-04925. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 24 Jan 2023
- **Citation:** TCN-2023-NCLT-04925
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/golconda-textiles-private-limited-cp-ib-no-94-07-hdb-2022-76bee945

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Mr. Ahmed Alam Khan against M/s Golconda Textiles Private Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The financial creditor, Ahmed Alam Khan, claims that the corporate debtor defaulted on repayment of a financial debt exceeding one crore rupees. The corporate debtor contested the application, arguing that there was no valid financial debt and that the application lacked necessary documentation.

## Facts

Mr. Ahmed Alam Khan, a financial creditor and also a director/shareholder of M/s Golconda Textiles Private Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, claiming that the corporate debtor defaulted on a financial debt exceeding one crore rupees. The financial creditor had lent a sum of Rs. 9,15,78,532/- to the corporate debtor as financial loans over time. The total amount due was claimed to be Rs. 18,28,95,628/-, including principal and interest. The corporate debtor argued that the financial creditor had not provided sufficient documentary proof of the debt and that the funds transferred were not commercial borrowings. The corporate debtor also pointed out that the financial creditor was a director and shareholder, and the

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## Issues and analysis

### Issue 1: Whether a financial debt of a sum over Rupees one crore due and payable by the Corporate Debtor to …

**Ratio:** The legal principle applied is that a 'financial debt' includes amounts raised under any

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**Reasoning:** The court reasoned that the financial creditor had advanced funds to the corporate debtor

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**Interpretation:** The interpretation of 'financial debt' is broad and includes amounts raised

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**Application:** The court applied the ratio to the facts by noting that the financial creditor

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## Parties

- **Judges:** Venkata Ramakrishn…; Satya Ranjan…
- **Appellants:** Ahmed Ala…
- **Respondents:** Golkonda Textiles…; Golkonda Textiles…

## Timeline

- **2022-02-21 — Proposed IR…**: Proposed Interim Resolution…
- **2023-01-24 — Order Da…**: Order in CP(IB) 94/7/2022 pronounced, recorded vide separate sheets. Company Petition…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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