# In the matter of Krystal Stone Exports Ltd.

> NCLT judgment dated 2024-05-03. Citation: TCN-2024-NCLT-01451. The case involves a Company Petition filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 3 May 2024
- **Citation:** TCN-2024-NCLT-01451
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/krystal-stone-exports-ltd-c92bf46a

## Summary

### Background

The case involves a Company Petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Stressed Assets Stabilization Fund (SASF), the Financial Creditor, against Krystal Stone Exports Ltd, the Corporate Debtor, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The Corporate Debtor was initially admitted into CIRP on 24.09.2019, but this order was later set aside by the NCLAT. The NCLAT revived the petition and allowed the Appellant to file a Reply to Section 7 Application. The Financial Creditor claimed default on loan facilities granted to the Corporate Debtor between 1996-98 by IDBI Bank, later assigned to SASF. The Corporate Debtor contested the petition on grounds of maintainability, limitation, and res judicata, citing prior

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## Facts

IDBI Bank granted loan facilities to Krystal Stone Exports Ltd. between 1996 and 1998, with B. D. Agarwal, L. D. Agarwal, Rajeev Agarwal, and Sangeeta Agarwal acting as Directors/Guarantors. These loans were secured through various documents, including deeds of hypothecation and agreements for pledge of shares. After the Corporate Debtor defaulted, a notice was sent on 16.12.1999, and a recall notice was issued on 27.07.2001, demanding Rs. 9,44,47,364. IDBI filed an Original Application in DRT Jaipur in 2002, obtaining a Recovery Certificate. The Corporate Debtor filed a reference before BIFR, which was rejected. Subsequent legal actions included SARFAESI notices, appeals before AAIFR, and writ petitions in the High Court, culminating in the Supreme Court dismissing

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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 considered the submissions of both parties and the documents placed on record.

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

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**Application:** In this case, the NCLT found that the Financial Creditor had met the

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## Parties

- **Judges:** V. G. Bisht…; SH. PRABHAT…
- **Appellants:** Stressed Assets…
- **Respondents:** Krystal Stone…

## Timeline

- **1996-01-01 — Loan Facilitie…**: IDBI Bank granted loan facilities to Krystal…
- **1999-12-16 — Notice for Di…**: Notice was sent on 16.12.1999 for Disclosure and publishing the names of defaulting…

## 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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