# In the matter of Makjai Laboratories Pvt. Ltd.

> NCLT judgment dated 2023-07-21. Citation: TCN-2023-NCLT-02392. The Saraswat Co-operative Bank Limited, the Financial Creditor/Applicant, filed an application…

- **Court:** NCLT
- **Order date:** 21 Jul 2023
- **Citation:** TCN-2023-NCLT-02392
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/makjai-laboratories-pvt-ltd-168a2401

## Summary

### Background

The Saraswat Co-operative Bank Limited, the Financial Creditor/Applicant, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Makjai Laboratories Pvt Ltd, the Corporate Debtor. The claim was for a total default of Rs. 6,72,10,022.75 as of 14.10.2022. The dates of default mentioned in the petition were 02.11.2020 and 13.07.2022. The petition was filed on 11.11.2022, and the Corporate Debtor's account was classified as NPA on 02.11.2020. The Corporate Debtor had approached the Financial Creditor in 2018 for financial facilities, which were sanctioned under KWIK – LAP for Rs. 430 lakh. The facility was repayable with a prime lending rate of 14.40% p.a. and secured

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## Facts

Saraswat Co-operative Bank Limited (Financial Creditor) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Makjai Laboratories Pvt Ltd (Corporate Debtor) for a default of Rs. 6,72,10,022.75 as of 14.10.2022. The Corporate Debtor's account was classified as NPA on 02.11.2020. The Financial Creditor had sanctioned a loan of Rs. 430 lakh in 2018, which was secured by personal guarantees and hypothecation of assets. The Corporate Debtor defaulted on repayment, leading to the NPA classification and recall notices. The Corporate Debtor argued that it was an MSME affected by the closure of Pfizer's manufacturing plants and the Covid-19 pandemic. The Corporate Debtor also contended that the application was barred by Section 10A of the IBC, as

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the IBC is maintainable given the provisions of Section …

**Ratio:** Section 10A of the IBC prohibits the initiation of CIRP under Section 7 if the default

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**Reasoning:** The NCLT reasoned that the applicant admitted that the Corporate Debtor's account was

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**Interpretation:** The interpretation of Section 10A is that it provides a bar on initiating CIRP

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**Application:** Since the default was deemed to have occurred before 02.11.2020, it fell within

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## Parties

- **Judges:** Kuldip Kumar…; ANURADHA SANJAY…
- **Appellants:** Saraswat Co-operat…
- **Respondents:** Makjai Laboratorie…
- **Advocates:** Nikhil R…

## Timeline

- **2018-01-01 — Loan San…**: The Corporate Debtor approached the Financial Creditor for a loan, and the Financial…
- **2018-12-27 — Sanction…**: Sanction letter issued…

## 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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