# In the matter of Impact Metals Ltd. CP(IB) No. 254-7-HDB-2021

> NCLT judgment dated 2023-05-25. Citation: TCN-2023-NCLT-03172. The case involves an application filed by Kudapa Gangadhara Rao and Smt. Madhavi Kudapa, the…

- **Court:** NCLT
- **Order date:** 25 May 2023
- **Citation:** TCN-2023-NCLT-03172
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/impact-metals-ltd-cpib-no-254-7-hdb-2021-add1ab53

## Summary

### Background

The case involves an application filed by Kudapa Gangadhara Rao and Smt. Madhavi Kudapa, the Financial Creditors (FCs), against Impact Metals Ltd, the Corporate Debtor (CD), to initiate the Corporate Insolvency Resolution Process (CIRP) due to the CD's default in repaying a debt. The CD was incorporated under the Companies Act, 1956, and is in the business of manufacturing Aluminium Containers and Cold Forgings. The Director and Shareholder of the CD, Mr. Gorrepati Venkat Rao, approached the FCs for a loan due to a financial crisis. The FCs provided a loan of Rs.1,63,19,694/- between 2011 and 2012, with an agreed interest rate of 24% per annum. The CD deposited original registered sale deeds of their immovable property to create a simple/equitable mortgage. The

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## Facts

Kudapa Gangadhara Rao and Smt. Madhavi Kudapa (Financial Creditors) filed an application against Impact Metals Ltd (Corporate Debtor) to initiate CIRP under Section 7 of the IBC due to unpaid debt. The Corporate Debtor was in the business of manufacturing Aluminium Containers and Cold Forgings. The Director of the Corporate Debtor, Mr. Gorrepati Venkat Rao, requested a loan from the Financial Creditors due to a financial crisis. The Financial Creditors provided a loan of Rs.1,63,19,694/- between 2011-05-02 and 2012-06-19, with an agreed interest rate of 24% per annum. The Corporate Debtor deposited original registered sale deeds of their immovable property to create a simple/equitable mortgage. The Directors also stood as Guarantors for the loan. The Corporate Debtor

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## Issues and analysis

### Issue 1: Whether the debt claimed by the Applicant as due and payable by the Respondent is not a Financial …

**Ratio:** A financial debt is defined under Section 5(8) of the IBC as a debt along with interest,

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**Reasoning:** The NCLT considered the evidence presented by both parties, including the balance sheet

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**Interpretation:** The NCLT interpreted the definition of financial debt under Section 5(8) of the

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**Application:** The NCLT applied the definition of financial debt to the facts of the case and

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## Parties

- **Judges:** Venkata Ramakrishn…; Satya Ranjan…
- **Appellants:** Kudapa Gangadhara…
- **Respondents:** Impact Meta…
- **Advocates:** Maharshi Vi…; N.B. Suda…

## Timeline

- **2011-05-02 — Loan Disbursem…**: Financial Creditors started disbursing…
- **2012-06-19 — Loan Disburse…**: Financial Creditors completed disbursing the loan to the Corporate Debtor, totaling…

## 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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