# In the matter of Sree Sankara Community for Ayurveda Consciousness Limited CP(IBC)-56-KOB-2022

> NCLT judgment dated 2023-05-04. Citation: TCN-2023-NCLT-03467. Kerala Financial Corporation filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 4 May 2023
- **Citation:** TCN-2023-NCLT-03467
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sree-sankara-community-for-ayurveda-consciousness-limited-cpibc-56-kob-2022-72f6d0c9

## Summary

### Background

Kerala Financial Corporation filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Sree Sankara Community for Ayurveda Consciousness Limited. The Financial Creditor, a state financial institution established in 1953, sought to recover a debt of Rs. 25,31,99,615/- as of 04.11.2022. The Corporate Debtor had defaulted on loan repayments, leading to its account being classified as NPA on 02.09.2015. Despite multiple opportunities for settlement, including a compromise settlement application and OTS proposals, the debt remained unpaid. The Financial Creditor then initiated proceedings under the IBC.

## Facts

Kerala Financial Corporation (KFC), a state financial institution, sanctioned a loan facility of Rs. 10,00,00,000/- to Sree Sankara Community for Ayurveda Consciousness Limited (SSCAL). A loan agreement was executed on 23.09.2013, and SSCAL acknowledged the debt. SSCAL hypothecated movable assets on 24.09.2013, and KFC disbursed Rs. 9,35,00,000/- between 24.09.2013 and 04.10.2013. SSCAL created a first charge on its fixed assets through an equitable mortgage on immovable properties in Changanassery, Kottayam, and Anakkara. Directors and shareholders provided personal guarantees for full repayment. SSCAL defaulted on loan repayments, and its account was classified as NPA on 02.09.2015. KFC issued notices under Section 29 of the SFC Act and initiated revenue recovery

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## Issues and analysis

### Issue 1: Whether the application filed by Kerala Financial Corporation under Section 7 of the Insolvency and …

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

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**Reasoning:** The court found that Kerala Financial Corporation, being a financial creditor, had

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues by

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**Application:** The court applied Section 7 to the facts of the case, finding that Kerala

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## Parties

- **Judges:** P. Moha…; Satya Ranjan…
- **Appellants:** Kerala Financial…
- **Respondents:** SREE SANKARA…
- **Advocates:** Vinod…; C I Abr…

## Timeline

- **1953-12-01 — Establishment of…**: Kerala Financial Corporation established under…
- **2013-09-23 — Loan Agre…**: Loan agreement executed between Kerala Financial Corporation and Sree Sankara Community…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(7) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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