# In the matter of North American Mercantile India Private Limited

> NCLT judgment dated 2024-01-02. Citation: TCN-2024-NCLT-03371. The case involves a company petition filed by North American Mercantile India Private Limited…

- **Court:** NCLT
- **Order date:** 2 Jan 2024
- **Citation:** TCN-2024-NCLT-03371
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/north-american-mercantile-india-private-limited-098ccd1f

## Summary

### Background

The case involves a company petition filed by North American Mercantile India Private Limited under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was filed after the Corporate Applicant's account was declared a Non-Performing Asset (NPA) due to its inability to repay debts to its creditors. The Corporate Applicant defaulted on a term loan agreement with Abhyudaya Co-Operative Bank Ltd., which was later assigned to M/s ASREC (India) Limited. The Corporate Applicant's business operations ceased in December 2019, reflecting its financial challenges.

## Facts

North American Mercantile India Private Limited, incorporated on 10.01.2002, engaged in the distribution of mobile devices and import of kitchen appliances and cookware, filed a petition on 23.09.2022 to initiate Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016. The company's account was declared a Non-Performing Asset (NPA) due to its inability to repay debts. The Corporate Applicant failed to pay Rs. 9,59,52,261.25/-. The Financial Debt was incurred on 07.08.2018. The company entered into a term loan agreement dated 07.08.2018 with Abhyudaya Co-Operative Bank Ltd. for Rs. 9,50,00,000/- at 11.50% interest. The bank later enhanced the credit facilities to Rs. 9,50,00,000 at 13% interest. This loan was assigned

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## Issues and analysis

### Issue 1: Whether the Corporate Applicant has committed default under Section 10 of the Insolvency and …

**Ratio:** Section 10 of the Insolvency and Bankruptcy Code, 2016 allows a corporate applicant to

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**Reasoning:** The Bench found that the Corporate Applicant had defaulted in making payments under the

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**Interpretation:** Section 10 provides a mechanism for a corporate debtor to initiate insolvency

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**Application:** The Corporate Applicant's failure to repay the loan amount, coupled with the

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## Parties

- **Judges:** V.G. B…; Prabhat…
- **Respondents:** North American…

## Timeline

- **2002-01-10 — Incorpor…**: North American Mercantile India…
- **2018-08-07 — Term Loan Ag…**: The Corporate Applicant entered into a term loan agreement with Abhyudaya Co-Operative…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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