# In the matter of P S Earthmovers Private Ltd.

> NCLT judgment dated 2024-02-29. Citation: TCN-2024-NCLT-02290. Tata Motors Finance Solutions Limited initiated a Section 7 application under the Insolvency…

- **Court:** NCLT
- **Order date:** 29 Feb 2024
- **Citation:** TCN-2024-NCLT-02290
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/p-s-earthmovers-private-ltd-bfc0fe8a

## Summary

### Background

Tata Motors Finance Solutions Limited initiated a Section 7 application under the Insolvency and Bankruptcy Code, 2016, against P S Earthmovers Private Ltd, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) due to defaults in repayment of a term loan facility. The applicant, an NBFC, had granted credit facilities to the corporate debtor, including a term loan of INR 15 Crore and a channel finance facility of INR 4.25 Crore. The corporate debtor started defaulting from January 2022, leading to the account being declared a Non-Performing Asset (NPA) in May 2022. Despite recall notices, the corporate debtor failed to repay the outstanding dues, which amounted to INR 8,42,44,714.08 as of October 31, 2022.

## Facts

Tata Motors Finance Solutions Limited (the Applicant), an NBFC, granted credit facilities to P S Earthmovers Private Ltd (the Corporate Debtor), including a term loan of INR 15 Crore and a channel finance facility of INR 4.25 Crore. The term loan facility was disbursed on June 30, 2016, and was to be repaid in 84 installments between June 2016 and May 2023. The interest rate was fixed at 13% per annum, with an additional 2% in case of default. Tata Hitachi executed a deed of indemnity, agreeing to indemnify the Applicant for defaulted amounts up to INR 20 Crore. The Corporate Debtor started defaulting on repayments from January 2022, and the account was declared an NPA in May 2022. A recall notice was issued on May 24, 2022, but the Corporate Debtor failed to repay the

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, is …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The tribunal considered the facts presented by the financial creditor, including the

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues by

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**Application:** The tribunal found that the financial creditor had established a debt and

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## Parties

- **Judges:** BIDISHA BA…; SHRI. D.A…
- **Appellants:** Tata Motors…
- **Respondents:** PS Earthmovers…

## Timeline

- **2016-06-07 — Sanction Lette…**: Financial Creditor issued a sanction letter for…
- **2016-06-10 — Credit Facility Letter…**: Financial Creditor issued a credit facility letter to the Corporate Debtor, granting a…

## 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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