# In the matter of Manav Investment and Trading Company Limited

> NCLT judgment dated 2023-08-28. Citation: TCN-2023-NCLT-01886. DBS Bank India Limited filed a Company Petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 28 Aug 2023
- **Citation:** TCN-2023-NCLT-01886
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/manav-investment-and-trading-company-limited-32850a73

## Summary

### Background

DBS Bank India Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Manav Investment and Trading Company Limited, alleging default in payment of Rs. 10,06,54,436. The Corporate Debtor is the promoter holding company of Kerosam Group and has shareholdings in Kerosam Industries Limited and Birla Tyres Limited. The Financial Creditor extended a working capital facility to Kesoram Industries Limited (KIL), which was later partly transferred to Birla Tyres Limited (BTL) after a demerger. The Corporate Debtor provided a promoter undertaking guaranteeing the debt. After BTL defaulted, the Financial Creditor invoked the guarantee and sold pledged shares of BTL held by the Corporate Debtor. However, a balance amount remained due.

## Facts

DBS Bank India Limited (Financial Creditor) extended a working capital facility to Kesoram Industries Limited (KIL). KIL's tyre business was demerged into Birla Tyres Limited (BTL). Part of the working capital facility was transferred to BTL. Manav Investment and Trading Company Limited (Corporate Debtor) is the promoter holding company of Kerosam Group and has shareholdings in Kerosam Industries Limited and Birla Tyres Limited. The Corporate Debtor executed a promoter undertaking in favor of the Financial Creditor, guaranteeing the debt. BTL defaulted on the working capital facility. The Financial Creditor issued a notice of default and invoked the promoter undertaking. The Financial Creditor sold pledged shares of BTL held by the Corporate Debtor, realizing a portion

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## Issues and analysis

### Issue 1: Whether a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, is maintainable …

**Ratio:** A petition under Section 7 of the IBC is not maintainable against an NBFC if the NBFC

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**Reasoning:** The court relied on the definition of 'corporate person' under Section 3(7) of the IBC,

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**Interpretation:** The definition of 'corporate person' under the IBC excludes financial service

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**Application:** The Corporate Debtor, Manav Investment and Trading Company Limited, presented

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## Parties

- **Judges:** Smt Bidisha…; Balraj…
- **Appellants:** DBS Bank India…
- **Respondents:** Manav Investment…

## Timeline

- **2018-01-19 — WC Agreement E…**: Working Capital Consortium Agreement…
- **2019-11-08 — Demerger San…**: Scheme of arrangement sanctioned by the Adjudicating Authority for the demerger of KIL's…

## 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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