# In the matter of Lokmangal Sugar Ethanol And Co-generation Industries Limited

> NCLT judgment dated 2024-10-15. Citation: TCN-2024-NCLT-00433. IFCI Limited, the Financial Creditor, filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 15 Oct 2024
- **Citation:** TCN-2024-NCLT-00433
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/lokmangal-sugar-ethanol-and-co-generation-industries-limited-0dba7fa5

## Summary

### Background

IFCI Limited, the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Lokmangal Sugar Ethanol and Cogeneration Industries Limited, the Corporate Debtor, due to defaults in repayment of a loan obtained from the Sugar Development Fund (SDF). The loan was disbursed based on a tripartite agreement, and the Corporate Debtor defaulted on its repayment obligations, leading to the Financial Creditor recalling the loan and initiating recovery proceedings.

## Facts

The Corporate Debtor, Lokmangal Sugar Ethanol and Cogeneration Industries Limited, availed a loan from the Sugar Development Fund (SDF) through IFCI Limited, the Financial Creditor, to set up a bagasse-based co-generation power project. The loan was disbursed on 28.03.2014, with repayment terms including a moratorium period and half-yearly installments. The Corporate Debtor defaulted on its repayment obligations, leading the Financial Creditor to recall the loan on 03.09.2019. The outstanding amount as of 30.09.2023 was Rs. 8,20,55,028/-. The Corporate Debtor acknowledged the debt in a letter dated 02.08.2021, requesting the Financial Creditor not to pursue legal recovery actions. The Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted on its …

**Ratio:** The existence of a financial debt and default are prerequisites for admitting a petition

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**Reasoning:** The Corporate Debtor acknowledged the debt owed to the Financial Creditor and did not

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**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to determine whether a

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**Application:** The Corporate Debtor's acknowledgment of the debt and the evidence of default

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## Parties

- **Judges:** Charanjeet Singh…; LAKSHMI G…
- **Appellants:** IFCI Li…
- **Respondents:** Lokmangal Sugar…

## Timeline

- **2009-01-14 — Corporate Debtor…**: Lokmangal Sugar Ethanol and Cogeneration Industries Limited requested a loan from the…
- **2012-08-27 — Tripartite Ag…**: A Tripartite Agreement was entered into between the original lender, 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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