# In the matter of Kanoria Sugar and General Manufacturing Company Limited IA NO.25-ALD-2021 In CP (IB) No.129-ALD-2020

> NCLT judgment dated 2022-04-27. Citation: TCN-2022-NCLT-03051. The case pertains to an application filed by Punjab National Bank (Financial Creditor) under…

- **Court:** NCLT
- **Order date:** 27 Apr 2022
- **Citation:** TCN-2022-NCLT-03051
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kanoria-sugar-and-general-manufacturing-company-limited-ia-no25-ald-2021-in-cp-i-8b58fc0a

## Summary

### Background

The case pertains to an application filed by Punjab National Bank (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Kanoria Sugar and General Manufacturing Company Limited (Corporate Debtor). An intervention application (IA No.25/ALD/2021) was filed, arguing for a stay on the proceedings based on a prior order from the Allahabad High Court related to farmers' interests. The Financial Creditor had provided credit facilities to the Corporate Debtor, which the Corporate Debtor failed to repay, leading to the account being declared NPA.

## Facts

Punjab National Bank (PNB), the Financial Creditor, extended credit facilities, including term loans, overdraft facilities, and cash credit facilities, to Kanoria Sugar and General Manufacturing Company Limited, the Corporate Debtor. Two agreements were executed between PNB and Kanoria Sugar on 01.02.2016 and 29.12.2017, respectively. In pursuance of these agreements, PNB increased the financial assistance to Kanoria Sugar from ₹75.82 crore to ₹80.80 crore. A charge was created on 29.12.2017 against the mortgage of properties of the Corporate Debtor. Kanoria Sugar failed to make payments as per the agreement terms. Consequently, PNB declared Kanoria Sugar's account as Non-Performing Asset (NPA) on 30.06.2018, with the default occurring on 30.04.2018. PNB issued a

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## Issues and analysis

### Issue 1: Whether the intervention application (IA No.25/ALD/2021) should be allowed, thereby staying the …

**Ratio:** The court held that the Allahabad High Court's order prioritizing farmers' interests over

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**Reasoning:** The court reasoned that the IBC aims to resolve insolvency, not merely recover amounts.

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**Interpretation:** The court interpreted the Allahabad High Court's order narrowly, focusing on

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**Application:** The court applied the ratio by finding that the Allahabad High Court's order

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## Parties

- **Judges:** Rajasekha…; Virendra Kumar…
- **Respondents:** Kanoria Sugar and…

## Timeline

- **2016-02-01 — Agreement between PNB…**: First agreement executed between Punjab National Bank and Kanoria Sugar and General…
- **2017-12-29 — Agreement between PNB…**: Second agreement executed between Punjab National Bank and Kanoria Sugar and General…

## 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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