# In the matter of Shree Ram Cottex Industries Private Limited

> NCLT judgment dated 2023-07-17. Citation: TCN-2023-NCLT-02490. Raj Radhe Finance Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 17 Jul 2023
- **Citation:** TCN-2023-NCLT-02490
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/shree-ram-cottex-industries-private-limited-6baee5ae

## Summary

### Background

Raj Radhe Finance Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Shree Ram Cottex Industries Private Limited, citing a default in payment of outstanding dues amounting to Rs 1,33,12,701. The financial creditor had provided a term loan of Rs 1,50,00,000 to the corporate debtor in April 2022, but the corporate debtor defaulted on repayments starting from October 2022.

## Facts

Raj Radhe Finance Ltd. (Financial Creditor) provided a term loan of Rs. 1,50,00,000 to Shree Ram Cottex Industries Private Limited (Corporate Debtor) in April 2022. The loan was secured by hypothecation of book debts and stocks. The Corporate Debtor was to repay the loan in 24 monthly installments commencing from August 2022, with an interest rate of 18% per annum. The Corporate Debtor made two monthly installment payments. The Corporate Debtor defaulted on repayments from October 2022. As of February 2023, an amount of Rs. 1,33,12,701 remained outstanding. The Financial Creditor issued a loan recall notice on 02.12.2022, but received no response. The Corporate Debtor admitted to the financial assistance and facing financial difficulties in its reply dated 18.05.2023.

## Issues and analysis

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

**Ratio:** Section 7(5) of the Insolvency and Bankruptcy Code, 2016, stipulates the requirements for

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**Reasoning:** The court found that the Financial Creditor had provided sufficient evidence, including

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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 court applied Section 7(5) to the facts, noting that the Financial

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## Parties

- **Judges:** SHAMMI…; KAUSHALENDRA…
- **Appellants:** Raj Radhe Finance…
- **Respondents:** Shree Ram Cottex…

## Timeline

- **2022-04-01 — Corporate Debtor…**: Shree Ram Cottex Industries Private Limited applied for a term loan of Rs. 1,50,00,000…
- **2022-04-11 — Loan Sanc…**: Loan of Rs. 1,50,00,000…

## 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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