# In the matter of Sapphire Clothing Company India Private Limited

> NCLT judgment dated 2023-11-22. Citation: TCN-2023-NCLT-00638. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 22 Nov 2023
- **Citation:** TCN-2023-NCLT-00638
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sapphire-clothing-company-india-private-limited-df5abf36

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by P. Jayabalan, the Financial Creditor, against Sapphire Clothing Company India Private Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claims that the Corporate Debtor defaulted on a debt of Rs. 1,24,04,630.57. The Corporate Debtor acknowledges the debt but disputes the calculation and claims the applicant obtained signatures on blank papers. The Adjudicating Authority is considering whether to admit the application for CIRP.

## Facts

P. Jayabalan, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Sapphire Clothing Company India Private Limited, the Corporate Debtor. The Financial Creditor claims that the Corporate Debtor defaulted on a debt of Rs. 1,24,04,630.57. The Corporate Debtor is a private limited company incorporated on 04.05.2005. The Financial Creditor started providing financial assistance to the Corporate Debtor based on board resolutions dated 01.04.2022 and 28.04.2022. The total payment made by the Financial Creditor was Rs. 2,40,28,630.57, out of which Rs. 1,16,24,000 was repaid, leaving a balance of Rs. 1,24,04,630.57. The Corporate Debtor agreed to repay the

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

**Ratio:** Section 7(5)(a) of the IBC, 2016, states that the Adjudicating Authority may admit an

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**Reasoning:** The Adjudicating Authority considered the documents provided by the Financial Creditor,

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** The Adjudicating Authority found that the Corporate Debtor had defaulted on a

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## Parties

- **Judges:** SANJIV…; Venkataraman…
- **Appellants:** P.JAYAB…
- **Respondents:** SAPPHIRE CLOTHING…
- **Advocates:** Jayanthi…; M.Manik…

## Timeline

- **2005-05-04 — Incorporation of…**: Sapphire Clothing Company India Private Limited was incorporated under the Companies Act,…
- **2022-04-01 — Board Reso…**: Board Resolution of Corporate Debtor dated…

## 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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