# In the matter of M K Fashion Hub Private Limited

> NCLT judgment dated 2024-10-07. Citation: TCN-2024-NCLT-00476. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 7 Oct 2024
- **Citation:** TCN-2024-NCLT-00476
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/m-k-fashion-hub-private-limited-56b39415

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 by Profectus Capital Private Limited, a Non-Banking Finance Company, against M. K. Fashion Hub Private Limited, the Corporate Debtor. Profectus Capital had sanctioned an Enterprise Mortgage Loan to M. K. Fashion Hub, with Mr. Manish Prakashlal Khilani and Ms. Riya Khilani as co-borrowers. The loan was disbursed in two tranches on 31.12.2021 and 31.01.2022. Despite agreeing to repay the loan, the respondent defaulted, leading to the account being classified as NPA on 04.07.2023. The applicant issued a demand notice on 07.07.2023 under Section 13(2) of the SARFESI Act, 2002. The respondent raised objections, which were not accepted by the applicant. The applicant took

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## Facts

Profectus Capital Private Limited, a Non-Banking Finance Company, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M. K. Fashion Hub Private Limited, a company incorporated under the Companies Act, 2013. Profectus Capital had sanctioned an Enterprise Mortgage Loan to M. K. Fashion Hub, with Mr. Manish Prakashlal Khilani and Ms. Riya Khilani as co-borrowers, vide sanction letter dated 31.12.2021 for Rs.4,70,00,000/- for working capital. The loan was disbursed in two tranches: Rs.3,07,23,535/- on 31.12.2021 and Rs.1,28,26,197/- on 31.01.2022. Documents such as Loan Agreement and Demand Promissory Note were executed on 31.12.2021. The co-borrowers executed mortgage deeds. The respondent defaulted on payments, leading to the account

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, should be …

**Ratio:** The legal principle applied is that if a debt exists and the corporate debtor has

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**Reasoning:** The court considered the submissions of both parties and the documents presented,

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** In this case, the Financial Creditor, Profectus Capital, demonstrated that a

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## Parties

- **Judges:** Chitra Ha…; Velamur G Venkata…
- **Appellants:** Profectus Capital…
- **Respondents:** M K Fashion Hub…

## Timeline

- **2021-12-31 — Loan Sanction…**: Sanction letter dated 31.12.2021 for an amount of Rs.4,70,00,000/- for working capital…
- **2021-12-31 — First Loan Dis…**: Loan amount of Rs.3,07,23,535/-…

## 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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