# In the matter of Simbhaoli Sugar Ltd.

> NCLT judgment dated 2024-07-11. Citation: TCN-2024-NCLT-01034. The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 11 Jul 2024
- **Citation:** TCN-2024-NCLT-01034
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/simbhaoli-sugar-ltd-d1ac9119

## Summary

### Background

The case pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Oriental Bank of Commerce (now Punjab National Bank) against Simbhaoli Sugars Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The application was initially filed on 17.09.2018, claiming a total financial debt of Rs. 1,03,61,04,783.00 as on 31.07.2018, with a default date of 31.08.2016. The Corporate Debtor contested the application, citing various reasons including the applicability of RBI circulars, restructuring proposals, and disputes over the debt amount. The Financial Creditor argued that there was a clear debt and default, and the application was independent of the RBI circulars.

## Facts

Oriental Bank of Commerce (now Punjab National Bank) extended credit facilities to Simbhaoli Sugars Limited amounting to Rs. 110 crore under Facility Letter No CN0017/L/SSL/2015-16 dated 29.01.2016 and Loan Agreement dated 14.03.2016. Simbhaoli Sugars defaulted on repayments starting 31.08.2016, leading to a total outstanding debt of Rs. 130.04 crores as of the application date. The bank classified the account as NPA on 30.11.2016. The Corporate Debtor failed to register a pari-passu charge on its assets. The bank issued legal notices on 29.10.2017 and 01.11.2017, demanding repayment. The Corporate Debtor submitted a restructuring proposal, which the bank rejected. The bank also filed OA no. 1240 of 2017 before the Debts Recovery Tribunal-II, New Delhi. The Corporate

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## Issues and analysis

### Issue 1: Whether there is debt and default within …

**Ratio:** The existence of debt and default is a prerequisite for admitting an application under

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**Reasoning:** The tribunal relied on the Facility Letter, Loan Agreement, CIBIL Report, and NeSL

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**Interpretation:** The I&B Code defines 'debt' as a liability or obligation in respect of a

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**Application:** The tribunal applied the ratio to the facts of the case, noting that the

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## Parties

- **Judges:** Praveen…; Ashish…
- **Appellants:** Oriental Bank of…
- **Respondents:** Simbhaoli Sugar…

## Timeline

- **2016-08-31 — Date of D…**: Simbhaoli Sugars Limited…
- **2018-09-17 — Application…**: Oriental Bank of Commerce filed an…

## 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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