# In the matter of Refrigeration and Electrical Appliances (India) Limited C.P. No. 337-IB-MB-2020

> NCLT judgment dated 2023-05-08. Citation: TCN-2023-NCLT-03456. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 8 May 2023
- **Citation:** TCN-2023-NCLT-03456
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/refrigeration-and-electrical-appliances-india-limited-cp-no-337-ib-mb-2020-67cf9c8f

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by M/S Modi Builders, the Financial Creditor, against Refrigeration and Electrical Appliances (India) Private Limited, the Corporate Debtor, to initiate a corporate insolvency resolution process. The Financial Creditor claimed that the Corporate Debtor defaulted on a loan. The Corporate Debtor opposed the petition, arguing that there was no financial debt or default and that the petition was not maintainable.

## Facts

M/S Modi Builders, the Applicant/Financial Creditor, advanced a loan to Refrigeration and Electrical Appliances (India) Private Limited, the Respondent/Corporate Debtor. The initial loan of Rs. 45,00,000/- was given on December 31, 2007. Subsequently, another loan of Rs. 2,00,000/- was advanced on October 15, 2011. The Corporate Debtor's balance sheets from 2008 to 2018 reflected the liability to repay the loan, with the outstanding amount increasing over time, reaching Rs. 1,57,24,324/- as of March 31, 2018. The Financial Creditor claimed the date of default was April 1, 2018, and filed an application under Section 7 of the IBC to initiate a corporate insolvency resolution process. The Corporate Debtor opposed the petition, arguing that there was no financial debt or

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## Issues and analysis

### Issue 1: Whether the Financial Creditor has established the existence of a financial debt and default by the …

**Ratio:** The existence of a financial debt must be proven through credible evidence, such as loan

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**Reasoning:** The Adjudicating Authority noted that while the Corporate Debtor's balance sheets

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**Interpretation:** The court interpreted Section 7 of the IBC to require sufficient evidence of

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**Application:** In this case, the court found that the Financial Creditor had not provided

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## Parties

- **Judges:** Kuldip Kumar…; ANURADHA SANJAY…
- **Appellants:** M/S Modi Bu…
- **Respondents:** Refrigeration and…

## Timeline

- **2007-12-31 — Initial…**: Financial Creditor advanced a loan of Rs.…
- **2011-10-15 — Additiona…**: Financial Creditor advanced another loan of…

## 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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