# In the matter of SITI Broadband Network Services Private Limited

> NCLT judgment dated 2023-10-31. Citation: TCN-2023-NCLT-00938. Aditya Birla Finance Limited, the Financial Creditor, initiated Corporate Insolvency Resolution…

- **Court:** NCLT
- **Order date:** 31 Oct 2023
- **Citation:** TCN-2023-NCLT-00938
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/siti-broadband-network-services-private-limited-5a7d836d

## Summary

### Background

Aditya Birla Finance Limited, the Financial Creditor, initiated Corporate Insolvency Resolution Process (CIRP) against Siti Broadband Services Private Limited, the Corporate Debtor. The Corporate Debtor filed an Interlocutory Application (I.A(IBC) No. 4770/2023) seeking dismissal of the CIRP under Section 65 of the I&B Code, alleging fraudulent initiation of proceedings. The Corporate Debtor argued that the Financial Creditor was aware of the defaults of Siti Networks Limited (Co-Borrower) before sanctioning the loan and had waived the cross-default clause. The Financial Creditor contended that the application was based on new facts and documents and that the cross-default clause could not be triggered based on communications but required written admission of

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## Facts

Aditya Birla Finance Limited (Financial Creditor) extended a loan of Rs. 5 Crore to Siti Broadband Services Private Limited (Corporate Debtor) and Siti Networks Limited (Co-Borrower) under a Facility Agreement dated 26.02.2020. The agreement contained a cross-default clause. The Corporate Debtor alleges that the Financial Creditor was aware of the Co-Borrower's existing defaults before sanctioning the loan, based on SEBI disclosures and communications. The Financial Creditor issued a loan recall notice on 24.05.2022 and initiated CIRP after the Co-Borrower disclosed defaults in January 2022. The Corporate Debtor argues that the Financial Creditor's actions were malicious and fraudulent, aiming to recover dues despite knowing the Co-Borrower's financial distress. The

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## Issues and analysis

### Issue 1: Whether the averments made by the Corporate Debtor in the present application constitute the …

**Ratio:** Section 65 of the I&B Code allows the Adjudicating Authority to impose a penalty and

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**Reasoning:** The court reasoned that the Corporate Debtor and Co-Borrower were aware of the

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**Interpretation:** Section 65 is interpreted to mean that the Adjudicating Authority can penalize

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**Application:** The court applied the provisions of Section 65 to the facts of the case,

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## Parties

- **Judges:** MANNI SANKARIAH…; BINOD KUMAR…
- **Respondents:** Siti Broadband…

## Timeline

- **2020-02-07 — Credit Arrangement…**: Financial Creditor issued a Credit Arrangement Letter to Siti Broadband Services Private…
- **2020-02-26 — Facility Ag…**: Facility Agreement executed between the Financial Creditor, Corporate Debtor, and…

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