# In the matter of Khusi Building Solutions Pvt. Ltd. COMPANY PETITION IB (IBC) NO. 568 of 2020

> NCLT judgment dated 2023-04-17. Citation: TCN-2023-NCLT-03777. M/s. Financial World India Pvt. Ltd. filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 17 Apr 2023
- **Citation:** TCN-2023-NCLT-03777
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/khusi-building-solutions-pvt-ltd-company-petition-ib-ibc-no-568-of-2020-e5ac88cc

## Summary

### Background

M/s. Financial World India Pvt. Ltd. filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Khusi Building Solutions Pvt. Ltd. The Financial Creditor claimed that the Corporate Debtor defaulted on a payment of Rs. 1,92,86,418/- as of 09.04.2019. The Financial Creditor, a Non-Banking Financial Company (NBFC), alleged that the Corporate Debtor had approached them for a loan, and a sanction letter for Rs. 7,25,00,000/- was issued. However, the Memorandum of Understanding (MOU) related to the loan was reportedly lost during the shifting of the Financial Creditor's office, leading to the filing of an FIR. The Corporate Debtor admitted to receiving Rs. 7,25,00,000/- and

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## Facts

M/s. Financial World India Pvt. Ltd. (Financial Creditor), an NBFC, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against M/s. Khusi Building Solutions Pvt. Ltd. (Corporate Debtor). The Financial Creditor claimed a default of Rs. 1,92,86,418/- as of 09.04.2019. The Financial Creditor alleged that the Corporate Debtor approached them for a loan of Rs. 7,25,00,000/-, and a sanction letter was issued. A Memorandum of Understanding (MOU) was executed but later lost during the shifting of the Financial Creditor's office, leading to the filing of an FIR on 07.01.2019. The Corporate Debtor admitted to receiving Rs. 7,25,00,000/- and repaying Rs. 6,23,23,000/-, leaving Rs. 1,01,77,000/- plus interest unpaid. The Corporate Debtor

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** An application under Section 7 of the IBC requires substantiation of a debt and default,

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**Reasoning:** The NCLT reasoned that the Financial Creditor, despite being an NBFC, failed to produce a

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**Interpretation:** Section 7 of the IBC mandates that a financial creditor must provide sufficient

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**Application:** In this case, the Financial Creditor's failure to provide a loan agreement or

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## Parties

- **Judges:** P.S.N. P…; BINOD KUMAR…
- **Appellants:** M/s. Financial…
- **Respondents:** M/s. Khusi…
- **Advocates:** Rishabh G…; Apoorv Ra…; +2 more

## Timeline

- **2013-06-18 — Incorporation of…**: M/s Khusi Building Solutions…
- **2014-10-01 — Expression of…**: Expression of Interest was…

## 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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