# In the matter of Kotsons Pvt. Ltd. (IB) – 761(ND)-2022

> NCLT judgment dated 2023-06-09. Citation: TCN-2023-NCLT-03001. State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 9 Jun 2023
- **Citation:** TCN-2023-NCLT-03001
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kotsons-pvt-ltd-ib-761nd-2022-0a38ddd5

## Summary

### Background

State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s. Kotsons Pvt. Ltd., the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP). The application was based on the Corporate Debtor's default in payment of a sum of Rs. 109,33,71,603.87 as of 31.08.2022, comprising Rs. 87,60,91,332.43 of principal and Rs. 21,72,80,271.44 of interest. The Financial Creditor argued that the Corporate Debtor's loan accounts were classified as NPA on 11.11.2020, and despite a demand notice issued on 18.06.2021, the Corporate Debtor failed to make the outstanding payments. The Corporate Debtor contended that the application was not maintainable under Section 10A of the IBC, as the NPA declaration fell

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## Facts

State Bank of India (SBI), the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against M/s. Kotsons Pvt. Ltd., the Corporate Debtor, before the National Company Law Tribunal (NCLT), New Delhi. The application was filed on 21.09.2022. SBI claimed that Kotsons Pvt. Ltd. had defaulted on a payment of Rs. 109,33,71,603.87 as of 31.08.2022, which included a principal amount of Rs. 87,60,91,332.43 and interest of Rs. 21,72,80,271.44. The loan accounts of the Corporate Debtor were classified as Non-Performing Assets (NPA) on 11.11.2020, according to RBI guidelines. SBI issued a demand notice on 18.06.2021 under Section 13(2) of the SARFAESI Act, 2002, demanding Rs. 96,36,96,693/- as on 17.06.2021 along with interest.

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

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

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**Reasoning:** The NCLT observed that the Financial Creditor had provided sufficient evidence, including

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**Interpretation:** Section 7 of the IBC provides the mechanism for financial creditors to trigger

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**Application:** The NCLT found that the Financial Creditor had established the existence of a

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## Parties

- **Judges:** BACHU VENKAT…; ATUL CHAT…
- **Appellants:** State Bank of…
- **Respondents:** M/s. KOTSONS PVT.…

## Timeline

- **1978-04-22 — Incorporation of…**: The Respondent Company, M/s. KOTSONS PVT. LTD., was incorporated as a Company Limited by…
- **2010-01-01 — Merger of State Bank of…**: The State Bank of Indore got…

## 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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