# In the matter of Lokshakti Sugar & Allied Industries Limited CP (IB) No.57-MB-IV-2021

> NCLT judgment dated 2023-01-11. Citation: TCN-2023-NCLT-05094. The case involves an application filed by Indian Renewable Energy Development Agency Limited…

- **Court:** NCLT
- **Order date:** 11 Jan 2023
- **Citation:** TCN-2023-NCLT-05094
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/lokshakti-sugar-allied-industries-limited-cp-ib-no57-mb-iv-2021-067f62af

## Summary

### Background

The case involves an application filed by Indian Renewable Energy Development Agency Limited (IREDA), the Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code), against Lokshakti Sugar & Allied Industries Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP). The application was triggered by the Corporate Debtor's default on a term loan sanctioned by IREDA for setting up a bagasse-based cogeneration plant. The default was significant, amounting to Rs. 69,43,53,390 as of 30.09.2020, including principal, interest, liquidated damages, and incidental charges. IREDA had issued a sanction letter on 29.10.2012 for a term loan of Rs. 39,78,00,000. A loan agreement was executed on

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## Facts

Indian Renewable Energy Development Agency Limited (IREDA) sanctioned a term loan of Rs. 39,78,00,000 to Lokshakti Sugar & Allied Industries Limited on 29.10.2012 for setting up a 14 MW bagasse-based cogeneration plant. A loan agreement was executed on 22.04.2013. The Corporate Debtor also entered into a Common Loan Agreement dated 03.02.2015 with Union Bank of India (UBI) and Indian Overseas Bank (IOB), with UBO as Security Trustee. The Corporate Debtor defaulted on its repayment obligations, leading to a total outstanding of Rs. 69,43,53,390 as of 30.09.2020, including principal, interest, liquidated damages, and incidental charges. IREDA issued notices under the SARFAESI Act, but the Corporate Debtor failed to discharge its liability. The account was classified

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## Issues and analysis

### Issue 1: Whether the Financial Creditor, Indian Renewable Energy Development Agency Limited, has established …

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

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**Reasoning:** The NCLT examined the loan agreement, sanction letter, statement of accounts, and NeSL

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**Interpretation:** The term 'financial debt' is interpreted broadly to include any debt along with

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**Application:** In this case, the loan agreement and statement of accounts served as evidence

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## Parties

- **Judges:** Manoj Kumar…; KISHORE VEMULAPALL…
- **Appellants:** Indian Renewable…
- **Respondents:** Lokshakti Sugar &…
- **Advocates:** Fereshte…

## Timeline

- **2012-10-29 — Sanction Lette…**: IREDA issued a sanction letter to the Corporate Debtor for a term loan of Rs.…
- **2012-11-20 — Shareholder Re…**: Corporate Debtor passed shareholder resolutions for compliance with the sanction letter…

## 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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