# In the matter of Kosas Industries Private Limited

> NCLT judgment dated 2024-02-29. Citation: TCN-2024-NCLT-02295. The case involves a Company Petition filed by State Bank of India (Financial Creditor) under…

- **Court:** NCLT
- **Order date:** 29 Feb 2024
- **Citation:** TCN-2024-NCLT-02295
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kosas-industries-private-limited-a88b8d57

## Summary

### Background

The case involves a Company Petition filed by State Bank of India (Financial Creditor) under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC), seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Kosas Industries Private Limited (Corporate Debtor). The Adjudicating Authority had initially rejected the application due to limitation on 09.02.2023. The Financial Creditor then filed a Company Appeal (AT) before the National Company Law Appellate Tribunal (NCLAT), which was allowed on 14.09.2023, remitting the matter back to the Adjudicating Authority. The NCLAT directed the Adjudicating Authority to examine the application without being influenced by the earlier order, considering a settlement agreement dated 14.03.2018. Following the

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## Facts

State Bank of India (SBI), the Financial Creditor, sanctioned debt facilities to Kosas Industries Private Limited, the Corporate Debtor, amounting to Rs. 49,04,00,000/- on 07.05.2011. These facilities included term loans, fund-based working capital, non-fund-based working facilities, and a one-time project LC and forward contract limit. The facilities were renewed and enhanced over time. The Corporate Debtor's account was classified as NPA on 28.12.2015. SBI initiated securitization proceedings against the Corporate Debtor, which were challenged by the Corporate Debtor in S.A. No. 40 of 2018 before the DRT-II, Ahmedabad on 15.02.2018. In S.A. No. 40 of 2018, the Corporate Debtor acknowledged its liabilities and proposed to pay Rs. 9,40,00,000/- for an amicable

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## Issues and analysis

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

**Ratio:** The doctrine of election does not prevent Financial Creditors from approaching the NCLT

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**Reasoning:** The bench noted that the Financial Creditor had placed reliance on an Authority letter

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**Interpretation:** The Supreme Court's interpretation clarifies that initiating proceedings under

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**Application:** The Corporate Debtor's argument that the Financial Creditor had filed

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## Parties

- **Judges:** Anu Jagmoha…; KISHORE VEMULAPALL…
- **Appellants:** State Bank of…
- **Respondents:** Kosas Industries…

## Timeline

- **2015-12-28 — Account Classified as…**: The account of the Corporate…
- **2018-02-15 — SA No. 40 of 2…**: The Corporate Debtor challenged the securitization process initiated by the Financial…

## 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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