# In the matter of Jawan Mining and Construction Equipments Private Limited CP No. (IB)-64-7-JPR-2019

> NCLT judgment dated 2022-06-24. Citation: TCN-2022-NCLT-02048. Neil Industries Limited, claiming to be a Financial Creditor, filed an application under…

- **Court:** NCLT
- **Order date:** 24 Jun 2022
- **Citation:** TCN-2022-NCLT-02048
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/jawan-mining-and-construction-equipments-private-limited-cp-no-ib-64-7-jpr-2019-a054b727

## Summary

### Background

Neil Industries Limited, claiming to be a Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Jawan Mining and Construction Equipments Private Limited, the Corporate Debtor, seeking initiation of Corporate Insolvency Resolution Process (CIRP) due to default in repayment of a loan. The Financial Creditor claimed that the Corporate Debtor availed financial assistance of Rs. 5,95,00,000/- for working capital enhancement. The Corporate Debtor argued that the loan amounts were not due and payable on the date of filing the application, and that the demand notice was defective. The Corporate Debtor also alleged collusion between one of its directors and the Financial Creditor.

## Facts

Neil Industries Limited (Financial Creditor) filed an application against Jawan Mining and Construction Equipments Private Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP. The Financial Creditor claimed that the Corporate Debtor defaulted on a loan of Rs. 5,95,00,000/- availed for working capital enhancement. The loan was disbursed in three tranches: Rs. 25,00,000 on 26.05.2015, Rs. 4,70,00,000 between 26.05.2017 and 03.11.2017, and Rs. 1,00,00,000 on 28.03.2018. The Financial Creditor issued a demand notice on 07.01.2019, claiming an outstanding amount of Rs. 6,44,80,166/- as of 31.12.2018. The Corporate Debtor argued that the loan amounts were not due and payable on the date of filing the application

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## Issues and analysis

### Issue 1: Whether the debt qualifies as a 'Financial Debt' under Section 5(8) of the Insolvency and …

**Ratio:** A 'Financial Debt' must be disbursed against the consideration for the time value of

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**Reasoning:** The Adjudicating Authority relied on the Hon'ble Supreme Court's observation in Pioneer

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**Interpretation:** The essential requirement of a 'Financial Debt' is that it should have been

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**Application:** The Adjudicating Authority examined the loan agreements and related documents

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## Parties

- **Judges:** Deep Chandr…; RAGHU N…; +1 more
- **Appellants:** Neil Industries…
- **Respondents:** Jawan Mining and…

## Timeline

- **2015-05-20 — Sanction…**: Sanction letter for…
- **2015-05-26 — Disbursemen…**: Disbursement of Rs.…

## 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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