# In the matter of Sagar Automobiles Pvt. Ltd. C.P. (IB)-37(MP)-2021

> NCLT judgment dated 2022-08-25. Citation: TCN-2022-NCLT-01274. The case pertains to an application filed by Sagar Automobiles Pvt Ltd under Section 10 of the…

- **Court:** NCLT
- **Order date:** 25 Aug 2022
- **Citation:** TCN-2022-NCLT-01274
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sagar-automobiles-pvt-ltd-cp-ib-37mp-2021-aeb50614

## Summary

### Background

The case pertains to an application filed by Sagar Automobiles Pvt Ltd under Section 10 of the Insolvency and Bankruptcy Code, 2016, for initiating the Corporate Insolvency Resolution Process (CIRP). The corporate applicant, engaged in the business of selling vehicles, faced financial difficulties leading to the cessation of business in 2017. The applicant defaulted on loan repayments to various financial creditors, including Punjab National Bank and Mahindra & Mahindra Financial Services Ltd. The application was filed through its director, Mr. Yahaya Khan, and the corporate applicant proposed the name of Mr. Ashutosh Gokhale as the Interim Resolution Professional (IRP). However, the consent for the proposed IRP was later withdrawn.

## Facts

Sagar Automobiles Pvt Ltd, incorporated on 06.07.1995, engaged in the business of selling vehicles, with a registered address at 8/13, Babji Nagar, A.B. Road, Niranjanpur, Dewas Naka, Indore, Madhya Pradesh- 452010. The company's nominal share capital is Rs 3,15,00,000/- and the paid-up share capital is Rs 2,37,00,000/-. Due to financial difficulties, the business stopped in 2017. The company took loans from Mahindra and Mahindra Financial Services Ltd, secured by a mortgage on immovable property, and from Punjab National Bank for Rs 9.5 Crore, hypothecated on stocks and mortgaged immovable property. Mahindra and Mahindra Finance Ltd and Punjab National Bank issued notices due to non-payment of the loan. As of 18.01.2020, the company had 10 financial creditors

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## Issues and analysis

### Issue 1: Whether the application filed by the corporate applicant under Section 10 of the Insolvency and …

**Ratio:** Section 10 of the Insolvency and Bankruptcy Code, 2016, allows a corporate applicant to

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**Reasoning:** The Adjudicating Authority considered the application filed by the corporate applicant,

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**Interpretation:** Section 10 provides a mechanism for corporate debtors facing financial distress

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**Application:** The corporate applicant, being in default, was eligible to file an application

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## Parties

- **Judges:** Madan B.…; KAUSHALENDRA…
- **Respondents:** Sagar Automobiles…

## Timeline

- **1995-07-06 — Incorpor…**: Sagar Automobiles Pvt…
- **2017-01-01 — Business S…**: The business of the corporate applicant…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14(1) — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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