# In the matter of Privilege Industries Limited CP (IB) No. 495-MB-2021

> NCLT judgment dated 2022-06-16. Citation: TCN-2022-NCLT-02211. Yes Bank Limited, the Financial Creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 16 Jun 2022
- **Citation:** TCN-2022-NCLT-02211
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/privilege-industries-limited-cp-ib-no-495-mb-2021-1225eef6

## Summary

### Background

Yes Bank Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, against Privilege Industries Limited, the Corporate Debtor, for initiating Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed a total debt of Rs. 494,64,35,548/- outstanding as of 05.04.2021, with the date of default initially mentioned as 01.01.2020. The Corporate Debtor contested the application, arguing that the Financial Creditor had funded the interest accrued during the period between 01.01.2020 and 31.08.2020 by opening new loan accounts and routing money from the original loan accounts. The Corporate Debtor also pointed out that Housing Development of India (HDIL) had executed Corporate Guarantees in favor of

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## Facts

Yes Bank Limited (Financial Creditor) filed CP (IB) No.495/MB/2021 under Section 7 of the I&B Code, 2016, against Privilege Industries Limited (Corporate Debtor) for initiating CIRP. The Financial Creditor claimed a debt of Rs. 494,64,35,548/- outstanding as of 05.04.2021, with the initial date of default mentioned as 01.01.2020. The Financial Creditor had sanctioned and disbursed credit facilities amounting to Rs. 459,81,22,901/- to the Corporate Debtor over time, including Term Loans and Overdraft Facilities. The Corporate Debtor acknowledged the credit facilities but argued that the Financial Creditor had funded the interest accrued between 01.01.2020 and 31.08.2020 by opening new loan accounts. The Corporate Debtor also stated that Housing Development of India

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the I&B Code, 2016 is maintainable given the …

**Ratio:** Section 10A of the IBC, 2016, prohibits the initiation of insolvency proceedings for

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**Reasoning:** The court reasoned that if the date of default falls within the period specified in

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**Interpretation:** Section 10A was inserted to provide relief to companies affected by the

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**Application:** Since the court determined the date of default to be 01.10.2020, which falls

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## Parties

- **Judges:** KISHORE VEMULAPALL…; RAJESH S…
- **Appellants:** Yes Bank L…
- **Respondents:** Privilege…

## Timeline

- **2017-03-15 — Sanction Lette…**: Financial Creditor issued a sanction letter providing Term Loan 1, Term Loan 2 and…
- **2017-03-20 — Loan Agreement…**: Financial Creditor and Corporate Debtor entered into a Loan Agreement for Term Loan 1,…

## 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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