# In the matter of SITI Broadband Services Private Limited

> NCLT judgment dated 2023-10-31. Citation: TCN-2023-NCLT-00935. 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-00935
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/siti-broadband-services-private-limited-f6cb9110

## 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 under 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 in the agreement, leading to the recall of the entire loan facility advanced to Siti Broadband Services Private Limited.

## Facts

Aditya Birla Finance Limited ('Applicant') sanctioned a term loan of Rs. 5,00,00,000 to Siti Broadband Services Private Limited ('Corporate Debtor') and Siti Networks Limited ('Co-Borrower') under a Facility Agreement dated 26.02.2020. The loan was to be repaid in 19 quarterly installments after a moratorium of 5 quarters. From November 2021, the Co-Borrower defaulted on its loan repayment obligations. The Facility Agreement contained a cross-default clause (Clause 19.5), stating that if any member of the group is unable to pay its financial indebtedness, it would result in an event of default. The Financial Creditor issued a Notice of Recall dated 24.05.2022, recalling the entire loan facility and demanding payment of Rs. 4,43,04,986. The Corporate Debtor did not

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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 court reasoned that the Corporate Debtor's co-borrower, Siti Networks Limited,

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**Interpretation:** The interpretation of the cross-default clause is that it allows the Financial

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**Application:** The ratio and reasoning were applied to the specific facts of the case, where

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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, Siti Broadband Services…
- **2021-11-01 — Co-Borrower…**: Siti Networks Limited (Co-Borrower) began…

## 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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