# In the matter of Katyayni Contractors Private Limited

> NCLT judgment dated 2024-05-17. Citation: TCN-2024-NCLT-01313. Gokul Sai Udyog LLP, the financial creditor/applicant, filed a company petition (IB) No.…

- **Court:** NCLT
- **Order date:** 17 May 2024
- **Citation:** TCN-2024-NCLT-01313
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/katyayni-contractors-private-limited-1c56e623

## Summary

### Background

Gokul Sai Udyog LLP, the financial creditor/applicant, filed a company petition (IB) No. 350/KB/2022 under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Katyayni Contractors Private Limited, the corporate debtor/respondent, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The applicant claimed to have disbursed Rs. 6 crores to the corporate debtor based on a resolution passed in the partner's meeting of the LLP held on 11.05.2017, with an interest rate of 12% per annum. The corporate debtor repaid Rs. 2 crores, leaving a balance of Rs. 4 crores. The financial creditor issued legal notices demanding repayment, which were replied to by the corporate debtor denying the due and default. The corporate debtor contended that the Rs. 6

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## Facts

Gokul Sai Udyog LLP (Financial Creditor) claimed to have disbursed Rs. 6 crores to Katyayni Contractors Private Limited (Corporate Debtor) based on a resolution dated 11.05.2017, with a 12% per annum interest rate. The disbursement occurred in four tranches during May and October 2017. The Corporate Debtor repaid Rs. 2 crores on 23.10.2017. The Financial Creditor issued legal notices on 14.04.2022 and 18.06.2022 demanding repayment of the outstanding Rs. 4 crores. The Corporate Debtor replied, stating that the Rs. 6 crores was an advance for construction materials, Rs. 4 crores worth of materials were supplied, and Rs. 2 crores were repaid. The Financial Creditor disputed this, stating that no GST invoices were provided. The resolution dated 11.05.2017 contained a

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is maintainable …

**Ratio:** To admit a petition under Section 7 of IBC, there has to be a debt, the debt should be in

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**Reasoning:** The NCLT reasoned that in the absence of any formal written agreement or other evidence,

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**Interpretation:** Section 7 of the IBC requires the existence of a debt and a default to initiate

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**Application:** In this case, there was no formal written agreement between the parties. The

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## Parties

- **Judges:** BIDISHA BA…; D. Ar…
- **Appellants:** Gokul Sai Udyog…
- **Respondents:** Katyayni Contracto…

## Timeline

- **2017-05-11 — Resolution…**: Resolution passed by Gokul Sai Udyog LLP to provide loans and advances to Katyayni…
- **2017-05-15 — First Disbu…**: Rs. 1 crore disbursed to Katyayni…

## 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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