# In the matter of Karni Developer and Construction Company Private Limited

> NCLT judgment dated 2024-02-22. Citation: TCN-2024-NCLT-02476. Phoenix ARC Private Limited, a financial creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 22 Feb 2024
- **Citation:** TCN-2024-NCLT-02476
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/karni-developer-and-construction-company-private-limited-b3bd8c66

## Summary

### Background

Phoenix ARC Private Limited, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Karni Developers and Construction Company Private Limited, the corporate debtor, for defaulting on a payment of Rs. 5,05,89,698/-. The corporate debtor is involved in the construction business. The corporate debtor had initially availed a term loan of Rs. 15 Crores from Union Bank of India, which was later assigned to Phoenix ARC Private Limited. Subsequently, the assigned debt was restructured, and a Memorandum of Compromise for a settlement amount of Rs. 18.10 Crore was entered into between the corporate debtor and the financial creditor. The corporate debtor sought

…

## Facts

Phoenix ARC Private Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Karni Developers and Construction Company Private Limited (Corporate Debtor) due to a default in payment of Rs. 5,05,89,698/-. The Corporate Debtor, involved in the construction business, initially availed a term loan of Rs. 15 Crores from Union Bank of India, sanctioned on 02.12.2005. This loan was later assigned to Phoenix ARC Private Limited on 03.12.2013. Subsequently, the debt was restructured, and a Memorandum of Compromise for a settlement amount of Rs. 18.10 Crore was agreed upon. The Corporate Debtor then sought additional funding, leading to a new term loan of Rs.

…

## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the IBC, 2016, is …

**Ratio:** Section 7 of the IBC, 2016, empowers the Adjudicating Authority to initiate CIRP upon

…

**Reasoning:** The NCLT found that the Financial Creditor had established the existence of the debt and

…

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

…

**Application:** The NCLT applied Section 7 of the IBC to the facts of the case and found that

…

## Parties

- **Judges:** Deep Chandr…; RAJEEV ME…
- **Respondents:** KARNI DEVELOPERS…

## Timeline

- **2005-12-02 — Term Loan S…**: Union Bank of India sanctioned a Term Loan of…
- **2013-12-03 — Loan Assi…**: Union Bank of India assigned the Term…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/karni-developer-and-construction-company-private-limited-b3bd8c66