# In the matter of R M Bhuther and Company Limited CP (IB) 957-MB-2020

> NCLT judgment dated 2023-03-03. Citation: TCN-2023-NCLT-04350. Gateway Leasing Private Limited filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 3 Mar 2023
- **Citation:** TCN-2023-NCLT-04350
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/r-m-bhuther-and-company-limited-cp-ib-957-mb-2020-9bbf5427

## Summary

### Background

Gateway Leasing Private Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against R M Bhuther & Company Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The financial creditor claimed a default of Rs. 1,15,88,470/-, comprising principal, interest, and other charges. The corporate debtor contested the claim, arguing that the debt was part of a larger lending transaction and that the cheques issued were for security and were to be replaced. The corporate debtor also argued that the default date should be considered as May 2020, which would fall under the period where initiation of CIRP was suspended due to the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020.

## Facts

Gateway Leasing Private Limited (Financial Creditor) provided two inter-corporate deposits (ICD 1 and ICD 2) to R M Bhuther & Company Limited (Corporate Debtor) in October 2019, each for Rs. 50,00,000/-. The Financial Creditor disbursed ICD 1 on October 18, 2019, and ICD 2 on October 19, 2019. The total debt claimed by the Financial Creditor was Rs. 1,15,88,470/-, including principal, interest, and other charges. The Corporate Debtor issued cheques dated February 28, 2020, for repayment of the principal and interest on ICD 1 and ICD 2. These cheques were dishonored due to 'Funds Insufficient'. The Corporate Debtor claimed that the debt was part of a larger lending transaction dating back to 2015-2016 and that the cheques were issued as security and were to be

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor is in default of a …

**Ratio:** The principle that a 'debt' and 'default' must be established for the Adjudicating

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**Reasoning:** The NCLT found that the Corporate Debtor had issued demand promissory notes and

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**Interpretation:** The term 'default' under the IBC is interpreted as the non-payment of a debt

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**Application:** The NCLT applied the ratio to the facts by noting the existence of the demand

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## Parties

- **Judges:** H.V. Subb…; Shyam Babu…
- **Appellants:** Gateway Leasing…
- **Respondents:** R.M. BHUTHER AND…
- **Advocates:** Mr Gaurav S…; Meet Pa…; +1 more

## Timeline

- **2019-10-18 — ICD 1 Dis…**: Gateway Leasing Private Limited disbursed Rs. 50,00,000/- (ICD 1) to R M Bhuther &…
- **2019-10-19 — ICD 2 Dis…**: Gateway Leasing Private Limited disbursed Rs. 50,00,000/- (ICD 2) to R M Bhuther &…

## 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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