# In the matter of McDowell Holdings Limited I.A. No. 86 & 87 of 2022 in CP (IB) No. 11-BB-2022

> NCLT judgment dated 2022-04-08. Citation: TCN-2022-NCLT-03303. The case involves an application filed by Sunstar Hotels and Estates Private Limited (Financial…

- **Court:** NCLT
- **Order date:** 8 Apr 2022
- **Citation:** TCN-2022-NCLT-03303
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mcdowell-holdings-limited-ia-no-86-87-of-2022-in-cp-ib-no-11-bb-2022-72186f92

## Summary

### Background

The case involves an application filed by Sunstar Hotels and Estates Private Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against McDowell Holdings Limited (Corporate Debtor). The Corporate Debtor had availed Inter-Corporate Deposit (ICD) from Zuari Fertilisers and Chemicals Limited (ZFCL), later merged with Zuari Agro Chemicals Limited (ZACL). A settlement agreement was entered on 17.06.2019 to facilitate repayment, but the Corporate Debtor failed to comply with the terms despite extensions. The Financial Creditor then entered into discussions with ZACL to restructure repayment obligations and take over ZACL's rights, discharging the Corporate Debtor's liability

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## Facts

M/s. Sunstar Hotels and Estates Private Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. McDowell Holdings Limited, the Corporate Debtor. The default amount was Rs. 16,80,66,348 as of 30.11.2021. The Corporate Debtor had availed an Inter-Corporate Deposit (ICD) from Zuari Fertilisers and Chemicals Limited (ZFCL), which later merged with Zuari Agro Chemicals Limited (ZACL). A settlement agreement dated 17.06.2019 was entered into with ZACL and Mangalore Chemicals and Fertilizers Limited (MCFL) for repayment of the ICD. The Corporate Debtor failed to comply with the terms of the settlement agreement, leading to requests for extensions,

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## Issues and analysis

### Issue 1: Whether the debt and default are proven for …

**Ratio:** The Hon'ble Supreme Court in M/s. Innoventive Industries Ltd. vs. ICICI Bank & Anr.

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**Reasoning:** The Corporate Debtor admitted the debt and default. The Financial Creditor furnished

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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 Corporate Debtor admitted the debt and default, and the

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## Parties

- **Judges:** Ajay Kumar…; Manoj Kumar…
- **Respondents:** M/s.Mcdowell…; M/s. McDowell…

## Timeline

- **2019-06-17 — Settlement Ag…**: Corporate Debtor entered into a Settlement Agreement with ZACL and MCFL to facilitate…
- **2021-11-20 — Remittance by Financial…**: Financial Creditor remitted the outstanding sum to the account of the Corporate Debtor,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(12) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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