# In the matter of Sovereign Industries Limited C.P. (IB) No.197-BB-2022

> NCLT judgment dated 2023-03-28. Citation: TCN-2023-NCLT-04024. Triveni Education Society filed a Company Petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 28 Mar 2023
- **Citation:** TCN-2023-NCLT-04024
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sovereign-industries-limited-cp-ib-no197-bb-2022-182149ef

## Summary

### Background

Triveni Education Society filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Sovereign Industries Limited, alleging a default of Rs. 1,63,80,097 as of March 31, 2022. The Financial Creditor, Triveni Education Society, claimed that it had extended credit facilities to the Corporate Debtor, Sovereign Industries Limited, in 2016. The Corporate Debtor acknowledged the debt and its inability to repay it. The petition was filed due to the Corporate Debtor's failure to meet its repayment obligations despite repeated requests and assurances.

## Facts

Triveni Education Society, a society registered under the Karnataka Societies Registration Act, 1960, filed a petition to initiate Corporate Insolvency Resolution Process (CIRP) against Sovereign Industries Limited. Sovereign Industries Limited, a company registered under the Companies Act, 1956, engaged in the manufacturing of sugar, had approached Triveni Education Society in 2016 for a credit facility. Triveni Education Society granted a loan of Rs. 1,77,00,000 to Sovereign Industries Limited. The last two repayments by Sovereign Industries Limited were in 2020, totaling Rs. 11,33,955. As of March 31, 2022, the total outstanding amount, including principal and interest, was Rs. 1,63,80,097, comprising a principal of Rs. 99,32,748 and interest of Rs. 75,81,301 at a

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor committed a default in payment of the financial debt exceeding the …

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

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**Reasoning:** The Adjudicating Authority observed that the amount in default, Rs. 1,63,80,097, was well

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**Interpretation:** Section 7 of the IBC, 2016 provides the mechanism for initiating CIRP by a

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**Application:** The Corporate Debtor defaulted on a financial debt of Rs. 1,63,80,097, which

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## Parties

- **Judges:** T. Krishn…; Manoj Kumar…
- **Appellants:** Triveni Education…
- **Respondents:** Sovereign…

## Timeline

- **2006-06-23 — Registration of…**: Triveni Education Society registered under the…
- **2009-01-05 — Registration of…**: Sovereign Industries Limited…

## 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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