# In the matter of Perpendicular Construction Private Limited

> NCLT judgment dated 2023-07-14. Citation: TCN-2023-NCLT-02509. L&T Finance Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 14 Jul 2023
- **Citation:** TCN-2023-NCLT-02509
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/perpendicular-construction-private-limited-63243e1d

## Summary

### Background

L&T Finance Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Perpendicular Construction Private Limited, the Corporate Debtor. The Corporate Debtor had taken two loans from L&T Housing Finance Company Ltd (later merged with L&T Finance Limited) amounting to Rs. 90 crore and Rs. 50 crore. Loan agreements were executed, and disbursements were made. The Corporate Debtor defaulted on interest payments after June 15, 2021. The Financial Creditor classified the account as NPA on October 13, 2021, and issued a recall notice on November 25, 2021, demanding Rs. 1,27,14,93,543.02. The Corporate Debtor argued against the application, claiming no actual

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## Facts

1. L&T Finance Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Perpendicular Construction Private Limited (Corporate Debtor).
2. The Corporate Debtor submitted two loan applications on November 15, 2019, to L&T Housing Finance Company Ltd, which sanctioned loans of Rs. 90 crore and Rs. 50 crore. L&T Housing Finance Company Ltd later merged with L&T Finance Limited.
3. The Financial Creditor sanctioned the loans on January 9, 2020, and August 6, 2020. Loan and Facility Agreements were executed on January 14, 2020, and September 10, 2020, respectively.
4. Rs. 86 crore out of the first loan and Rs. 40.25 crore out of the

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## Issues and analysis

### Issue 1: Whether the Applicant/Financial Creditor is a Financial Creditor as defined under Section 5(8) of …

**Ratio:** Section 5(8) of the IBC defines 'financial debt' as a debt along with interest, if any,

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**Reasoning:** The NCLT found that the loan was disbursed, and the Corporate Debtor had started

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**Interpretation:** The definition of financial debt requires a disbursement of funds for the time

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**Application:** In this case, the loan agreements, disbursement details, and the Corporate

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## Parties

- **Judges:** Praveen…; Ashish…
- **Appellants:** L&T Finance…
- **Respondents:** PERPENDICULAR…

## Timeline

- **2019-11-15 — Loan Applic…**: Corporate Debtor submitted two loan…
- **2020-01-09 — Loan Sanc…**: Financial Creditor…

## 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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