# In the matter of Guruanand Silk Mills Private Limited

> NCLT judgment dated 2024-11-14. Citation: TCN-2024-NCLT-00233. The case pertains to an application filed under Section 10 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 14 Nov 2024
- **Citation:** TCN-2024-NCLT-00233
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/guruanand-silk-mills-private-limited-10380c0a

## Summary

### Background

The case pertains to an application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 by Guruanand Silk Mills Private Limited, the Corporate Applicant, for initiation of the Corporate Insolvency Resolution Process (CIRP). The application was filed due to the Corporate Applicant facing difficulties in its survival during the Covid-19 pandemic, leading to a suspension of operations and unrealized receivables, resulting in financial losses. The company defaulted on its financial obligations to its Financial Creditor and Operational Creditors, amounting to Rs. 12,71,35,392/-. The account was classified as a Non-Performing Asset (NPA). The Board of Directors passed a resolution to file the application, and a special resolution was passed by the members at

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## Facts

Guruanand Silk Mills Private Limited, the Corporate Applicant, filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016, for initiation of the Corporate Insolvency Resolution Process (CIRP). The company faced difficulties during the Covid-19 pandemic, leading to a suspension of operations and unrealized receivables, resulting in financial losses. The company defaulted on its financial obligations to its Financial Creditor and Operational Creditors, amounting to Rs. 12,71,35,392/- as of 27.01.2022. Axis Bank Limited is the only Secured Financial Creditor with outstanding dues of Rs. 3,90,06,475 on account of CC limit, Rs. 77,44,965 on account of term loan, and Rs. 1,57,16,653 on account of ECLGS. The account of the Corporate Applicant was

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## Issues and analysis

### Issue 1: Whether the Corporate Applicant has established the existence of debt and its default beyond the …

**Ratio:** Section 4 of the Insolvency and Bankruptcy Code, 2016 prescribes the minimum threshold

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**Reasoning:** The court considered the documents submitted by the Corporate Applicant, including

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**Interpretation:** The existence of debt and default is a prerequisite for initiating CIRP. The

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**Application:** The court found that the Corporate Applicant had established the existence of

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## Parties

- **Judges:** ANIL RAJ C…; Kuldip Kumar…
- **Respondents:** Guruanand Silk…; D S Tex…

## Timeline

- **1998-07-17 — Incorporation of…**: Guruanand Silk Mills Private…
- **2018-12-24 — Financial Deb…**: The financial debt began with the creditor…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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