# In the matter of Morarjee Textiles Limited

> NCLT judgment dated 2024-02-09. Citation: TCN-2024-NCLT-02661. This is an application filed by Axis Bank Limited, the Financial Creditor (FC), under Section 7…

- **Court:** NCLT
- **Order date:** 9 Feb 2024
- **Citation:** TCN-2024-NCLT-02661
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/morarjee-textiles-limited-45d6e252

## Summary

### Background

This is an application filed by Axis Bank Limited, the Financial Creditor (FC), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), to initiate Corporate Insolvency Resolution Process (CIRP) against Morarjee Textiles Limited, the Corporate Debtor (CD). The debt arises from a Term Loan of Rs. 175,00,00,000/- granted by the FC to the CD via two sanction letters. The Term Loan was disbursed by the FC on 29.09.2017. A total amount of Rs.179,50,00,000/- fell due to the FC from the CD as on 30.09.2022. The FC prays that CIRP be initiated in respect of the CD.

## Facts

Axis Bank Limited (FC) granted a Term Loan of Rs. 175,00,00,000/- to Morarjee Textiles Limited (CD) via two sanction letters dated 25.09.2017. The loan was for repayment of existing high-cost debt and capex. A Term Loan Agreement was executed on 28.09.2017. The CD secured the loan with various documents, including an Indenture of Mortgage dated 10.08.2018. Mr. Harshvardhan Piramal executed a Promoter's Guarantee on 28.09.2017. The CD also executed an Undertaking dated 29.09.2017, allowing the FC to convert debt to equity. The FC entered into a Deed of Novation/Transfer dated 30.03.2018, transferring Rs. 30,00,00,000/- to Tata Capital Financial Services Limited. A Security Trustee Agreement was entered into on 10.05.2018. The CD defaulted on payment obligations on

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## Issues and analysis

### Issue 1: Whether the Application is …

**Ratio:** The IBC, being a special law and for special remedy, does not require special authority

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**Reasoning:** The NCLT found that paragraph 9 of the GPA gives specific authority to Mr. Prakash Rao to

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**Interpretation:** The court interpreted the General Power of Attorney (GPA) to determine if it

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**Application:** The NCLT was satisfied that the authority granted to Mr. Rao was sufficient for

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## Parties

- **Judges:** K. R. SAJI…; SANJIV…
- **Appellants:** Axis Bank L…
- **Respondents:** Morarjee Textiles…

## Timeline

- **2017-09-25 — Sanction L…**: Axis Bank Limited granted a Term Loan of Rs. 175,00,00,000/- to Morarjee Textiles Limited…
- **2017-09-28 — Term Loan Ag…**: A Term Loan Agreement was…

## 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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