# In the matter of Smaaash Entertainment Private
Limited I.A. 1930-2020 in C.P. (IB) No. 935-MB-2020

> NCLT judgment dated 2022-05-06. Citation: TCN-2022-NCLT-02840. Edelweiss Asset Reconstruction Company Limited filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 6 May 2022
- **Citation:** TCN-2022-NCLT-02840
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/smaaash-entertainment-private-limited-ia-1930-2020-in-cp-ib-no-935-mb-2020-7503a59b

## Summary

### Background

Edelweiss Asset Reconstruction Company Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Smaaash Entertainment Private Limited, citing an unresolved financial debt of Rs. 292,47,30,442/-. The financial debt arose from the issuance of secured redeemable non-convertible debentures by Smaaash to ECL Finance Limited, which were later assigned to Edelweiss. The Corporate Debtor allegedly defaulted on monthly interest payments, leading to the account being declared as NPA. The Corporate Debtor contested the petition, raising objections regarding the authorization of the signatory, the validity of the assignment agreement, and the applicability of Section 10A of the

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## Facts

Edelweiss Asset Reconstruction Company Limited (Financial Creditor) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Smaaash Entertainment Private Limited (Corporate Debtor). The claim is based on an alleged default of Rs. 292,47,30,442/-. The Corporate Debtor issued 14.75% secured redeemable non-convertible debentures with a face value of Rs. 10,00,000/- each, totaling Rs. 280,00,00,000/-, on a private placement basis in two tranches. The debentures were initially issued to ECL Finance Limited and subsequently assigned to Edelweiss Asset Reconstruction Company Limited. The Financial Creditor claims that the Corporate Debtor defaulted on monthly interest payments, leading to

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## Issues and analysis

### Issue 1: Whether the application filed by Edelweiss Asset Reconstruction Company Limited under Section 7 of …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The NCLT found that the Corporate Debtor had defaulted on its payment obligations to the

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**Interpretation:** Section 7 provides the mechanism for financial creditors to trigger the

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**Application:** The NCLT applied Section 7 to the facts of the case, finding that Edelweiss

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## Parties

- **Judges:** H.V. Subb…; Chandra Bha…
- **Appellants:** Edelweiss Asset…
- **Respondents:** Smaaash Entertainm…

## Timeline

- **2017-08-17 — Debentures…**: Debentures were issued…
- **2018-01-15 — First Suppleme…**: First Supplemental Deed executed between the Corporate Debtor and Catayst Trusteeship…

## 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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