# In the matter of Sohrab Spinning Mills Limited CP (IB) No. 140-Chd-Pb-2020

> NCLT judgment dated 2023-02-22. Citation: TCN-2023-NCLT-04489. Punjab National Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 22 Feb 2023
- **Citation:** TCN-2023-NCLT-04489
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sohrab-spinning-mills-limited-cp-ib-no-140-chd-pb-2020-05da4e69

## Summary

### Background

Punjab National Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Sohrab Spinning Mills Limited. The petition was signed by Mr. Hassan Ali, the Senior Manager and Attorney of Punjab National Bank. The Corporate Debtor is stated to be incorporated on 18.07.1989 under the Companies Act, 1956. The corporate debtor had approached the petitioner bank for a grant of CC Limit, which was enhanced from time to time. The account of the corporate debtor was classified as Non-Performing Asset (NPA) on 05.07.2017, leading the petitioner bank to invoke the guarantees and issue a

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## Facts

Punjab National Bank (PNB) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against Sohrab Spinning Mills Limited. PNB, acting as the Financial Creditor, claimed a default of Rs. 38,20,49,191.32 as of 14.01.2020. Sohrab Spinning Mills Limited, the Corporate Debtor, was incorporated on 18.07.1989. The Corporate Debtor had availed various credit facilities from PNB, including CC Limits, which were enhanced over time. The account was classified as a Non-Performing Asset (NPA) on 05.07.2017. PNB invoked guarantees and issued a notice under Section 13(2) of the SARFAESI Act, 2002. The Corporate Debtor failed to respond to the petition, leading to an ex parte order. The petition

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## Issues and analysis

### Issue 1: Whether the present application is filed within …

**Ratio:** The limitation period for filing an application under Section 7 of the IBC is three years

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**Reasoning:** The court observed that the date of default was 05.07.2017, when the corporate debtor was

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**Interpretation:** The interpretation of the limitation period is crucial to ensure that the

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**Application:** In this case, the court applied the ratio to the facts and concluded that the

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## Parties

- **Judges:** Harnam Singh…; SUBRATA KUM…
- **Appellants:** Punjab National…
- **Respondents:** Sohrab Spinning…; M/s Sohrab…
- **Advocates:** Arpit Singh…

## Timeline

- **1989-07-18 — Incorporation of…**: Sohrab Spinning Mills Limited was…
- **1997-12-01 — Initial CC F…**: Punjab National Bank granted a CC Facility…

## 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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