# In the matter of Megafin Securities Limited CP (IB) No.259-7-HDB-2022

> NCLT judgment dated 2023-04-11. Citation: TCN-2023-NCLT-03864. The case involves an application filed by Indian Overseas Bank (IOB), Asset Recovery Management…

- **Court:** NCLT
- **Order date:** 11 Apr 2023
- **Citation:** TCN-2023-NCLT-03864
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/megafin-securities-limited-cp-ib-no259-7-hdb-2022-aff07944

## Summary

### Background

The case involves an application filed by Indian Overseas Bank (IOB), Asset Recovery Management Branch, against Megafin Securities Limited, the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The Corporate Debtor had acted as a corporate guarantor for M/s Blossom Oils & Fats Limited, which availed credit facilities from IOB and subsequently defaulted on 01.01.2015. Blossom Oils & Fats Limited went into liquidation on 10.10.2017. The Financial Creditor (IOB) approached the Debt Recovery Tribunal (DRT), which passed a decree on 16.08.2019, directing the Corporate Debtor and guarantors to pay the outstanding amounts. Despite the DRT order, the amounts remained unpaid, leading IOB to file the Section 7 application seeking

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## Facts

Indian Overseas Bank (IOB), Asset Recovery Management Branch, is the Financial Creditor. M/s Megafin Securities Limited is the Corporate Debtor, acting as a corporate guarantor for M/s Blossom Oils & Fats Limited. Blossom Oils & Fats Limited availed credit facilities from IOB and defaulted on 01.01.2015. Blossom Oils & Fats Limited went into liquidation on 10.10.2017. IOB approached the Debt Recovery Tribunal (DRT), which passed an order on 16.08.2019, directing the Corporate Debtor and guarantors to pay the outstanding amounts. The DRT order was not complied with. The Corporate Debtor executed a Guarantee Agreement dated 05.10.2013, securing the repayment of M/s Blossom Oils & Fats Limited's debt. The Financial Creditor issued a notice dated 25.11.2015

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## Issues and analysis

### Issue 1: Whether the debt under the present …

**Ratio:** A fresh period of limitation of three years commences from the date of issuance of

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**Reasoning:** The Tribunal considered the DRT order dated 16.08.2019 and the date of filing of the

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**Interpretation:** The interpretation of the Limitation Act and its applicability to the IBC

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**Application:** The Tribunal applied the principle that a fresh period of limitation commences

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Indian Overseas…
- **Respondents:** Megafin Securities…; M/s Megafin…

## Timeline

- **2015-01-01 — Default by Blossom Oils…**: M/s Blossom Oils & Fats Limited defaulted on the credit facilities availed from Indian…
- **2015-03-31 — Account decla…**: The account of M/s Blossom Oils & Fats Limited…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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