# In the matter of SAFECO Hygiene Films Private Limited Inv. P.03-AHM-2021 In CP (IB) 96-AHM-2021

> NCLT judgment dated 2022-08-01. Citation: TCN-2022-NCLT-01507. Ayodhya Orchards LLP, the Financial Creditor, filed CP(IB) No. 96/AHM/2021 under Section 7 of…

- **Court:** NCLT
- **Order date:** 1 Aug 2022
- **Citation:** TCN-2022-NCLT-01507
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/safeco-hygiene-films-private-limited-inv-p03-ahm-2021-in-cp-ib-96-ahm-2021-6330e8d5

## Summary

### Background

Ayodhya Orchards LLP, the Financial Creditor, filed CP(IB) No. 96/AHM/2021 under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Safeco Hygiene Films Private Limited, the Corporate Debtor, due to an alleged default on an unsecured loan. Loganmoy Limited Mathesan Trust Company (BVI) Limited, a shareholder holding 66% of shares in the Corporate Debtor, filed an Intervention Application (Inv. P. No. 03/AHM/2021) seeking various reliefs, including dismissal of the CP(IB) and imposition of penalty on the Financial Creditor, alleging collusion and mala fide intentions. The Financial Creditor claimed that the Corporate Debtor defaulted on a loan of Rs. 10,50,00,000/- advanced in financial year

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## Facts

Ayodhya Orchards LLP (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Safeco Hygiene Films Private Limited (Corporate Debtor) for defaulting on a loan. The Financial Creditor claimed to have advanced an unsecured loan of Rs. 10,50,00,000/- to the Corporate Debtor in financial year 2019-20 at 18% p.a. compound interest, repayable on demand. The Corporate Debtor repaid Rs. 2,13,78,936/- towards interest. The Corporate Debtor assured repayment by 31.03.2021, but failed to do so, leading to a recall notice issued on 12.04.2021 and delivered on 30.04.2021. Loganmoy Limited Mathesan Trust Company (BVI) Limited (Intervenor), a 66% shareholder in the Corporate Debtor, filed an intervention application alleging

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency

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**Reasoning:** The NCLT found that the Financial Creditor had provided sufficient evidence to

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**Interpretation:** The statutory right of a Financial Creditor satisfying the requirements of

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**Application:** The NCLT applied the provisions of Section 7 of the Code to the facts of the

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## Parties

- **Judges:** DEEPTI M…; Ajai Das Me…
- **Appellants:** Ayodhya Orchards…
- **Respondents:** SAFECO HYGIENE…

## Timeline

- **2019-20-01 — Loan Advan…**: Financial Creditor advanced an unsecured loan of Rs. 10,50,00,000 to the Corporate Debtor…
- **2021-03-31 — Repayment As…**: Corporate Debtor assured repayment…

## 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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