# In the matter of SM Energy Teknik and Electronics Limited CP (IB) No. 483-MB-2020

> NCLT judgment dated 2022-11-17. Citation: TCN-2022-NCLT-00413. The case involves a company petition filed by SM Energy Teknik and Electronics Limited, the…

- **Court:** NCLT
- **Order date:** 17 Nov 2022
- **Citation:** TCN-2022-NCLT-00413
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sm-energy-teknik-and-electronics-limited-cp-ib-no-483-mb-2020-6be77a53

## Summary

### Background

The case involves a company petition filed by SM Energy Teknik and Electronics Limited, the Corporate Applicant, under Section 10 of the Insolvency and Bankruptcy Code 2016, read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, for initiating the Corporate Insolvency Resolution Process (CIRP). The Corporate Applicant states that it is engaged in the business of textile manufacturing and is listed with the Bombay Stock Exchange. The company's net worth has been eroding, and it has become negative despite capital infusion by the promoters. The company is unable to raise funds to pay its creditors and meet its obligations.

## Facts

SM Energy Teknik and Electronics Limited, the Corporate Applicant, filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The company is engaged in textile manufacturing and listed on the Bombay Stock Exchange. The company's net worth has eroded and become negative despite capital infusion. The company defaulted on payments to financial creditors, with a total default amount of Rs. 6,54,65,798.61. Specific defaults include a debt of Rs. 9,45,849 to Transpek Finance Limited, non-payment of listing fees to BSE, leading to suspension of trading, default in payment of statutory dues to NSDL, leading to termination of services, and a debt of Rs. 16,02,804 to Pavan Industries. The

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## Issues and analysis

### Issue 1: Whether the Corporate Applicant has committed a default as required under Section 10 of the …

**Ratio:** Section 10 of the IBC allows a corporate debtor to initiate CIRP if it has committed a

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**Reasoning:** The Corporate Applicant has admitted to defaulting on payments to various creditors,

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**Interpretation:** A default under Section 10 is interpreted as the inability or failure to pay

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**Application:** The Corporate Applicant's inability to pay its debts to various creditors, as

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## Parties

- **Judges:** Manoj Kumar…; KISHORE VEMULAPALL…
- **Respondents:** SM Energy Teknik…

## Timeline

- **1982-02-09 — Incorporati…**: SM Energy Teknik and…
- **2008-08-11 — Capital In…**: Promoters introduced capital of around Rs.5,73,20,000/- on Preferential basis allotment…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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