# In the matter of North American Mercantile India Private Limited

> NCLT judgment dated 2024-01-02. Citation: TCN-2024-NCLT-03346. 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-03346
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/north-american-mercantile-india-private-limited-6acd89c2

## Summary

### Background

The case involves a company petition filed by North American Mercantile India Private Limited on 23.09.2022, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was filed after the company's account was declared a Non-Performing Asset (NPA), and the company claimed it was unable to repay its debts to creditors. The corporate applicant defaulted on a payment of Rs. 9,59,52,261.25. The financial debt was incurred on 07.08.2018. The Corporate Applicant was incorporated on 10.01.2002 and is primarily engaged in the business of Distribution of mobile devices and import of kitchen appliances and cookware. The application was filed after the due approval of its shareholders by way of special resolution dated 19.08.2022.

## Facts

North American Mercantile India Private Limited filed a petition on 23.09.2022 to initiate Corporate Insolvency Resolution Process (CIRP) because it was unable to repay debts after its account was declared a Non-Performing Asset (NPA). The company defaulted on a payment of Rs. 9,59,52,261.25. The financial debt was incurred on 07.08.2018. The company was incorporated on 10.01.2002 and deals in mobile devices and kitchen appliances. The company entered into a term loan agreement with Abhyudaya Co-Operative Bank Ltd. on 07.08.2018 for Rs. 9,50,00,000 at 11.50% interest. The bank later enhanced the credit facility to the same amount at 13% interest. This loan was assigned to M/s ASREC (India) Limited, who also filed a separate petition. The Addl. Chief Metropolitan

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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 observed that the Corporate Applicant had defaulted in making payments and the

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**Interpretation:** Section 10 provides the mechanism for a corporate debtor to initiate CIRP when

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**Application:** The Corporate Applicant's failure to repay the loan amount of Rs.

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## Parties

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

## Timeline

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

## 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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