# In the matter of M.U. Buildcon Pvt. Ltd.

> NCLT judgment dated 2023-08-01. Citation: TCN-2023-NCLT-02226. The case pertains to a petition filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 1 Aug 2023
- **Citation:** TCN-2023-NCLT-02226
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mu-buildcon-pvt-ltd-843e8974

## Summary

### Background

The case pertains to a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Vinsan Credit & Securities Limited (Financial Creditor) against MU Buildcon Private Ltd. (Corporate Debtor) for initiation of the Insolvency Resolution Process. The Financial Creditor (FC) extended a credit facility to the Corporate Debtor (CD), which the CD allegedly defaulted on. The FC claims that the CD failed to pay interest for the financial years ending in March 2017, 2018, 2019, and 2020. The CD made partial payments but the FC declared the loan account as NPA and issued a legal notice demanding repayment. The CD acknowledged the debt in its reply to the legal notice but requested time to settle the outstanding amount.

## Facts

Vinsan Credit & Securities Limited (FC) extended a credit facility to MU Buildcon Private Ltd. (CD). The CD sought a credit facility of Rs. 10 Crores in May 2012. The FC sanctioned Rs. 4,00,00,000/- to the CD, subject to terms and conditions outlined in a letter dated 31.05.2012. The loan was to be disbursed via RTGS/NEFT/Cheque on demand by the CD, with an interest rate of 6% per annum. The FC disbursed the loan between June 2012 and March 2013, totaling Rs. 3,30,00,000/-. The CD paid Rs. 12,50,433/- as interest on 06.05.2013. Further disbursements were made on 07.03.2014 (Rs. 35,00,000/-) and 24.03.2014 (Rs. 15,00,000/-). The CD paid Rs. 18,01,087/- on 07.04.2014. Between April 2014 and March 2015, further disbursements were made. The CD paid Rs. 34,14,439 as

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in its repayment obligations to the Financial Creditor, …

**Ratio:** Section 7 of the IBC, 2016 allows a financial creditor to initiate CIRP against a

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**Reasoning:** The court relied on the CD's admission of debt in its reply to the legal notice, the FC's

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**Interpretation:** The interpretation of Section 7 of the IBC, 2016, is that if a financial

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**Application:** The court applied the ratio to the facts of the case, finding that the CD had

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## Parties

- **Judges:** SH. ASHOK KUMAR…; SH. L. N.…
- **Appellants:** Vinsan Credit &…
- **Respondents:** MU BUILDCON…
- **Advocates:** Palash S. S…

## Timeline

- **2012-05-01 — CD Approac…**: MU Buildcon Private Ltd. approached Vinsan Credit & Securities Limited for a credit…
- **2012-05-31 — FC Sanction…**: Vinsan Credit & Securities Limited sanctioned Rs. 4,00,00,000/- to MU Buildcon Private…

## 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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