# In the matter of Osg Auto Carriers Private Limited

> NCLT judgment dated 2023-10-17. Citation: TCN-2023-NCLT-01165. Ashok Investors Trust Limited, the Financial Creditor (FC), filed an application under Section…

- **Court:** NCLT
- **Order date:** 17 Oct 2023
- **Citation:** TCN-2023-NCLT-01165
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/osg-auto-carriers-private-limited-52904870

## Summary

### Background

Ashok Investors Trust Limited, the Financial Creditor (FC), filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against OSG Auto Carriers Private Limited, the Corporate Debtor (CD). The debt arises from an unsecured loan of Rs. 1,00,00,000 provided by the FC to the CD for business purposes under an agreement dated 24.01.2023. The FC issued a demand notice for payment of Rs. 1,05,52,329, including interest, after the CD failed to pay. The application seeks initiation of CIRP due to the CD's failure to repay the debt.

## Facts

Ashok Investors Trust Limited (FC) provided an unsecured loan of Rs. 1,00,00,000 to OSG Auto Carriers Private Limited (CD) on 24.01.2023 for business purposes. The loan agreement stipulated a 12% per annum interest rate, payable quarterly. The CD defaulted on interest payments for the first quarter (due on 01.04.2023) and the second quarter (due on 30.06.2023). The FC issued a demand notice on 10.07.2023 for Rs. 1,05,52,329, including interest. The CD acknowledged the debt in its books of accounts as of 01.04.2023. The FC submitted a bank statement confirming the loan disbursement and a NeSL certificate indicating the outstanding amount. The CD claimed financial difficulties due to the COVID-19 pandemic and requested additional time for repayment, alleging a verbal

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the IBC for initiating …

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

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**Reasoning:** The NCLT found that the CD did not deny the loan agreement and the bank statement

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**Interpretation:** Section 7 of the IBC provides a mechanism for financial creditors to recover

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**Application:** The NCLT applied Section 7 of the IBC to the facts of the case and found that

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## Parties

- **Judges:** K. R. SAJI…; SANJIV…
- **Appellants:** Ashok Investors…
- **Respondents:** OSG Auto Carriers…

## Timeline

- **2023-01-24 — Loan Agre…**: Loan agreement executed between Ashok Investors Trust Limited (FC) and OSG Auto Carriers…
- **2023-04-01 — Interest Du…**: Interest payment for…

## 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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