# In the matter of Raasi Refractories Limited

> NCLT judgment dated 2023-03-13. Citation: TCN-2023-NCLT-04267. SREI Equipment Finance Limited, the Financial Creditor (FC), filed an application under Section…

- **Court:** NCLT
- **Order date:** 13 Mar 2023
- **Citation:** TCN-2023-NCLT-04267
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/raasi-refractories-limited-e7aa773a

## Summary

### Background

SREI Equipment Finance Limited, the Financial Creditor (FC), filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against Raasi Refractories Limited, the Corporate Debtor (CD). The FC claimed that the CD defaulted on payments related to credit facilities extended under two Master Facility Agreements dated 01.07.2019, amounting to Rs.8,00,00,000/- and Rs.20,00,00,000/-. The CD denied the averments, alleging the FC failed to provide evidence of disbursement and that the application was intended to mislead the tribunal. The CD also argued that amounts were disbursed to M/s. Ram Laxman Parboiled Rice Pvt. Ltd., not directly to the CD. The FC contended that the CD had made part

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## Facts

SREI Equipment Finance Limited (Financial Creditor) sought to initiate Corporate Insolvency Resolution Process (CIRP) against Raasi Refractories Limited (Corporate Debtor) based on alleged default of financial debt. Two Master Facility Agreements were executed on 01.07.2019, under which the Financial Creditor extended credit facilities of Rs.8,00,00,000/- and Rs.20,00,00,000/- to the Corporate Debtor for purchasing plant and machinery. A personal guarantee was executed by Mr. Konda Laxmaiah, an authorized signatory of the Corporate Debtor, and a Supplemental Deed of Hypothecation was also executed. The Corporate Debtor allegedly failed to repay installments, leading the Financial Creditor to issue demand notices on 24.11.2020 and 17.05.2021, claiming outstanding

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## Issues and analysis

### Issue 1: Whether a financial debt of a sum over rupees one crore is due and payable by the respondent to the …

**Ratio:** The establishment of a financial debt requires proof of disbursement of funds to the

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**Reasoning:** The NCLT found that the Financial Creditor failed to provide sufficient evidence of

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**Interpretation:** The interpretation of 'financial debt' under the IBC requires a direct nexus

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**Application:** In this case, the Financial Creditor's claim failed because it could not

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## Parties

- **Judges:** DR.VENKATA…; Satya Ranjan…
- **Appellants:** SREI EQUIPMENT…
- **Respondents:** Raasi Refractories…

## Timeline

- **2019-07-01 — Master Facility…**: Two Master Facility Agreements were executed between SREI Equipment Finance Limited and…
- **2020-11-24 — Demand No…**: SREI Equipment Finance Limited issued a demand notice to Raasi Refractories Limited for…

## 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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