# In the matter of SITI Broadband Services Private Limited

> NCLT judgment dated 2023-10-31. Citation: TCN-2023-NCLT-00921. Aditya Birla Finance Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 31 Oct 2023
- **Citation:** TCN-2023-NCLT-00921
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/siti-broadband-services-private-limited-bcc9c526

## Summary

### Background

Aditya Birla Finance Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Siti Broadband Services Private Limited, citing a default in payment of a financial debt amounting to Rs. 4,38,50,997. The loan was sanctioned based on a Facility Agreement dated 26.02.2020, with Siti Networks Limited as a co-borrower. The applicant contended that Siti Networks Limited's default triggered a cross-default clause, leading to the recall of the entire loan facility advanced to Siti Broadband Services Private Limited.

## Facts

Aditya Birla Finance Limited ('Applicant') sought to initiate Corporate Insolvency Resolution Process (CIRP) against Siti Broadband Services Private Limited ('Corporate Debtor') under Section 7 of the Insolvency and Bankruptcy Code, 2016. The claim was based on a financial debt of Rs. 4,38,50,997. A term loan of Rs. 5,00,00,000 was sanctioned to the Corporate Debtor and its group company, Siti Networks Limited ('Co-Borrower'), through a Facility Agreement dated 26.02.2020. The loan was to be repaid in 19 quarterly installments after a moratorium. The Applicant contended that the Co-Borrower defaulted on its loan repayment obligations from November 2021. Clause 19.5 of the Facility Agreement stipulated that a default by any group company would trigger an event of

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## Issues and analysis

### Issue 1: Whether there exists a default in respect of the loan sanctioned to the Corporate Debtor vide …

**Ratio:** The legal principle applied is that a cross-default clause in a loan agreement can

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**Reasoning:** The Adjudicating Authority reasoned that the Corporate Debtor's co-borrower, Siti

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**Interpretation:** The interpretation of the cross-default clause was central to the decision. The

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**Application:** The ratio and reasoning were applied to the specific facts by noting that Siti

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## Parties

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

## Timeline

- **2020-02-26 — Facility Agree…**: Facility Agreement executed between Aditya Birla Finance Limited and Siti Broadband…
- **2021-11-01 — Co-borrower…**: Siti Networks Limited (Co-Borrower)…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60 — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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