# In the matter of Joy Homecreation Limited C.P. No. 358-IB-MB-2020

> NCLT judgment dated 2023-02-01. Citation: TCN-2023-NCLT-04827. Universal Petro-Chemicals Limited filed a Company Petition under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 1 Feb 2023
- **Citation:** TCN-2023-NCLT-04827
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/joy-homecreation-limited-cp-no-358-ib-mb-2020-a5985a33

## Summary

### Background

Universal Petro-Chemicals Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Joy Homecreation Limited, claiming an unresolved financial debt of Rs. 77,58,750/-. The petitioner states that they advanced a short-term accommodation loan to the corporate debtor, which the corporate debtor failed to repay. The corporate debtor opposed the petition, arguing that there was no financial debt and that the cheques issued were for security purposes only.

## Facts

Universal Petro-Chemicals Limited (the Petitioner) claimed to have advanced a short-term accommodation loan of Rs. 50,00,000/- to Joy Homecreation Limited (the Corporate Debtor) on 18.07.2014, with an interest rate of 12% per annum, payable after 90 days. In February 2015, the Corporate Debtor requested an additional Rs. 25,00,000/- under the same terms. The interest rate was increased to 15% p.a. from January 2017. The Corporate Debtor paid interest until March 2018 but then defaulted. On 4th November 2019, the debt became due. The Corporate Debtor issued two cheques, dated 1st October 2019 and 16th August 2019, for Rs. 75,00,000/- and Rs. 2,58,750/-, respectively, which were dishonored due to "Payment Stopped by Attachment Court Order". The Petitioner

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## Issues and analysis

### Issue 1: Whether the present Petition is maintainable under Section 7 of the Insolvency and Bankruptcy Code, …

**Ratio:** A petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 is maintainable if

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**Reasoning:** The court found that the Corporate Debtor had admitted to the debt in previous

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The court applied the principle that a financial debt existed based on the loan

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## Parties

- **Judges:** Kuldip Kumar…; ANURADHA SANJAY…
- **Appellants:** Universal…
- **Respondents:** Joy Homecreation…

## Timeline

- **2014-07-18 — Loan Adv…**: Petitioner advanced Rs.…
- **2015-02-01 — Additiona…**: Corporate Debtor requested an…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 138(b) — Discharge order](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-138)

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