# In the matter of Limtex (India) Limited CP(IB) No. 1837-KB-2019

> NCLT judgment dated 2022-06-13. Citation: TCN-2022-NCLT-02242. UCO Bank, a financial creditor, filed a petition under Section 7(1) of the Insolvency and…

- **Court:** NCLT
- **Order date:** 13 Jun 2022
- **Citation:** TCN-2022-NCLT-02242
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/limtex-india-limited-cpib-no-1837-kb-2019-b1681916

## Summary

### Background

UCO Bank, a financial creditor, filed a petition under Section 7(1) of the Insolvency and Bankruptcy Code, 2016, against Limtex (India) Limited, the corporate debtor, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The corporate debtor had availed credit facilities from the financial creditor with an aggregate limit of ₹15,00,00,000 under a consortium arrangement with State Bank of India. The corporate debtor failed to operate the accounts in terms of the agreement and started defaulting in servicing interest and principal amounts, leading to the account being classified as NPA on 30th September 2016. The financial creditor issued a demand notice on 6th March 2017, demanding payment of the outstanding amount.

## Facts

UCO Bank extended credit facilities to Limtex (India) Limited, with an aggregate limit of ₹15,00,00,000 under a consortium arrangement with State Bank of India (SBI). These facilities included Cash Credit, Export Packing Credit, FBP/FBN A/c, and Letter of Credit. The credit facilities were sanctioned on terms recorded in a Sanction Advice dated 20 November 2014. The Corporate Debtor defaulted on payments, leading to the account being classified as a Non-Performing Asset (NPA) on 30 September 2016. UCO Bank issued a demand notice on 6 March 2017, seeking payment of the outstanding dues. The outstanding amount was ₹25,58,52,513 as of 30 September 2019. The Corporate Debtor acknowledged the debt in its balance sheets for the years ending 31 March 2018 and 31 March 2019.

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The NCLT found that the Corporate Debtor had defaulted in the payment of its financial

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**Interpretation:** Section 7 provides the mechanism for a financial creditor to trigger the

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**Application:** The NCLT applied Section 7 to the facts of the case, noting that UCO Bank, as a

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## Parties

- **Judges:** Rajasekha…; Balraj…
- **Appellants:** UCO B…
- **Respondents:** Limtex (India)…

## Timeline

- **2014-11-20 — Sanction…**: Credit facilities were…
- **2014-11-21 — Board Reso…**: Corporate Debtor passed…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7(1) — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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