# In the matter of M. P. Enterprises & Associates Limited C.P. No. 64-IBC-MB-2023

> NCLT judgment dated 2023-04-20. Citation: TCN-2023-NCLT-03695. The Federal Bank Limited filed a Company Petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 20 Apr 2023
- **Citation:** TCN-2023-NCLT-03695
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/m-p-enterprises-associates-limited-cp-no-64-ibc-mb-2023-9a19783a

## Summary

### Background

The Federal Bank Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against M.P. Enterprises & Associates Limited, the Corporate Debtor, due to an unresolved financial debt of Rs. 4,07,65,837/-. The Corporate Debtor had approached the Financial Creditor in 2020 for credit facilities, leading to a sanctioned Term Loan Facility of Rs. 5,00,00,000/-. The Financial Creditor issued a demand promissory note to formalize the transaction. The Corporate Debtor defaulted on payment obligations, leading to the issuance of a notice under the SARFAESI Act. Despite a One-Time Settlement (OTS) proposal by the Corporate Debtor, it was rejected by the Financial Creditor.

## Facts

In 2020, M.P. Enterprises & Associates Limited (Corporate Debtor) approached The Federal Bank Limited (Financial Creditor) for credit facilities. The Financial Creditor sanctioned a Term Loan Facility of Rs. 5,00,00,000/- as a 'Commercial Vehicle Term Loan' based on the Corporate Debtor's representations. A Sanction Letter dated 17.03.2020 and a Demand Promissory Note dated 19.03.2020 were issued. The Corporate Debtor defaulted on the loan repayment, leading the Financial Creditor to issue a notice dated 13.07.2021 under the SARFAESI Act. Further defaults occurred, and the account was classified as NPA on 22.08.2022. The Financial Creditor issued a notice on 29.08.2022 under the SARFAESI Act. The Corporate Debtor submitted a One-Time Settlement (OTS) proposal on

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## Issues and analysis

### Issue 1: Whether the Financial Creditor has successfully demonstrated the existence of debt and default on …

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

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**Reasoning:** The court relied on the documents submitted by the Financial Creditor, including the

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**Interpretation:** Section 7 of the IBC requires the financial creditor to provide sufficient

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**Application:** In this case, the Financial Creditor provided sufficient documentary evidence

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## Parties

- **Judges:** H.V. Subb…; Madhu S…
- **Appellants:** The Federal Bank…
- **Respondents:** M.P. Enterprises…

## Timeline

- **2020-01-01 — Corporate Debtor…**: M.P. Enterprises & Associates Limited approached The Federal Bank Limited for credit…
- **2020-03-17 — Sanction Lette…**: The Federal Bank Limited issued a Sanction Letter for a Term Loan Facility of Rs.…

## 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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