# In the matter of Mahavir Industries Limited

> NCLT judgment dated 2024-04-15. Citation: TCN-2024-NCLT-01731. Utsav Securities Private Limited, a non-banking finance company, filed a petition under Section…

- **Court:** NCLT
- **Order date:** 15 Apr 2024
- **Citation:** TCN-2024-NCLT-01731
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mahavir-industries-limited-bc4a4e9f

## Summary

### Background

Utsav Securities Private Limited, a non-banking finance company, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Mahavir Industries Limited, the Corporate Debtor, due to default in repayment of a principal debt of INR 4,57,75,424.66/-. The default date is recorded as 01.11.2023.

## Facts

Utsav Securities Private Limited (Financial Creditor) filed a petition to initiate CIRP against Mahavir Industries Limited (Corporate Debtor) under Section 7 of the IBC, 2016. A Business Loan Agreement was executed between the parties for the expansion of the Corporate Debtor's business. The Financial Creditor sanctioned a loan of Rs.4,45,00,000/- on 01.09.2023, disbursed in seven tranches between 04.09.2023 and 16.09.2023. The Corporate Debtor defaulted on repayment, leading the Financial Creditor to issue default notices and a final recall notice on 28.10.2023, claiming a total debit of Rs. 4,57,75,424.66/-. The Corporate Debtor acknowledged the debt but cited financial difficulties, including market downtrends and the cancellation of a high-value contract, as

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## Issues and analysis

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

**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 failed to repay the outstanding amount due under

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**Interpretation:** The term 'default' under Section 3(12) of the IBC means non-payment of debt

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**Application:** The Corporate Debtor's failure to repay the loan amount, despite receiving

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## Parties

- **Judges:** SH. PRABHAT…; V.G. B…
- **Appellants:** Utsav Securities…
- **Respondents:** Mahavir Industries…

## Timeline

- **2023-09-01 — Loan Sanction…**: Financial Creditor sent a Loan Sanction Letter to the Corporate Debtor sanctioning an…
- **2023-09-04 — Loan Disbur…**: The loan amount was disbursed to the Corporate Debtor in 7 separate tranches between…

## 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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