# In the matter of Perpendicular Construction Private Limited

> NCLT judgment dated 2023-07-14. Citation: TCN-2023-NCLT-02514. 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-02514
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/perpendicular-construction-private-limited-76c75d54

## Summary

### Background

L&T Finance Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate 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, respectively. The loans were sanctioned in January and August 2020. 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 that the Financial Creditor misappropriated

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## Facts

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). The Corporate Debtor had obtained 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, sanctioned on January 9, 2020, and August 6, 2020, respectively. These loans were documented under a Loan Agreement dated January 14, 2020, and a Facility Agreement dated September 10, 2020. The first loan was for purchasing mortgage properties, and the second was for development management rights related to a group housing project. Out of

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## Issues and analysis

### Issue 1: Whether the applicant, L&T Finance Limited, qualifies as a Financial Creditor under Section …

**Ratio:** Section 5(8) of the IBC, 2016, defines 'financial debt' as a debt along with interest, if

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**Reasoning:** The NCLT perused the definition of financial debt under Section 5(8) of the IBC, 2016. It

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**Interpretation:** The definition of 'financial debt' requires that the debt be disbursed against

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**Application:** In this case, the NCLT found that the disbursal of the loan was evidenced by

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## Parties

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

## Timeline

- **2020-01-09 — Sanction of Fi…**: L&T Finance sanctioned a loan of Rs. 90…
- **2020-01-14 — Loan Agre…**: Loan Agreement executed between L&T…

## 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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