# In the matter of Laxmi Foils Private Limited Company Petition No. (IB)-742(ND)-2022

> NCLT judgment dated 2023-07-05. Citation: TCN-2023-NCLT-02658. The case involves a petition filed by Mr. Vijay Jain and 13 others (the Applicants) under…

- **Court:** NCLT
- **Order date:** 5 Jul 2023
- **Citation:** TCN-2023-NCLT-02658
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/laxmi-foils-private-limited-company-petition-no-ib-742nd-2022-577b2f06

## Summary

### Background

The case involves a petition filed by Mr. Vijay Jain and 13 others (the Applicants) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s Laxmi Foils Private Limited (the Respondent). The Applicants claim that the Respondent defaulted on credit facilities extended to them. The Respondent argues that the debt is not maintainable due to a Share Purchase Agreement (SPA) where the erstwhile shareholders (Applicants) waived their rights and claims against the company. The Respondent also alleges that the cheques presented by the Applicants are forged and fabricated, and that the application is a retaliatory measure against a police complaint filed by the Respondent's new management.

## Facts

Mr. Vijay Jain and 13 others, the Applicants, filed a petition under Section 7 of the IBC to initiate CIRP against M/s Laxmi Foils Private Limited, the Respondent, claiming a default on credit facilities amounting to Rs. 1,66,34,037/-. The Applicants, mostly shareholders, extended interest-free unsecured loans to the Respondent. In December 2021, discussions began for the sale of the Respondent's shareholding to M/s OMAT Business Private Limited. The Applicants' shareholding was acquired by OMAT Business Private Limited and Asish Mohapatra on 05.03.2022, under a Share Purchase Agreement (SPA) dated 03.02.2022. The SPA included a clause (6.5) where the erstwhile shareholders waived their rights and claims against the company. The Respondent argued that the valuation

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the IBC is maintainable given the Share Purchase …

**Ratio:** The legal principle is that a Share Purchase Agreement (SPA) can discharge debts if it

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**Reasoning:** The court reasoned that clause 6.5 of the SPA explicitly released, waived, and discharged

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**Interpretation:** The interpretation of the SPA clause is that it represents a comprehensive

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**Application:** The court applied this principle to the facts by noting that the Applicants, as

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## Parties

- **Judges:** Sh. Ashok Kumar…; L. N. G…
- **Appellants:** Vijay…
- **Respondents:** Laxmi Foils…

## Timeline

- **2000-03-10 — Incorporation of…**: M/s Laxmi Foils Private…
- **2021-12-01 — Discussion for Sale of…**: Discussion commenced between the erstwhile shareholders and M/s OMAT Business Private…

## 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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