# In the matter of Vatsalya Builders and Developers Private Limited C.P.(IB)725(MB)-2021

> NCLT judgment dated 2022-04-04. Citation: TCN-2022-NCLT-03414. The case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016…

- **Court:** NCLT
- **Order date:** 4 Apr 2022
- **Citation:** TCN-2022-NCLT-03414
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vatsalya-builders-and-developers-private-limited-cpib725mb-2021-9820adcc

## Summary

### Background

The case involves a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Narayan Mangal (Financial Creditor) against Vatsalya Builders and Developers Private Limited (Corporate Debtor) for an outstanding amount of Rs. 78,65,000. The Corporate Debtor had previously committed default in repayment of a principal loan together with interest, leading to the issuance of a Promissory Note. The parties then entered into a settlement agreement where Vatsalya agreed to pay Rs. 71,00,000 in installments. However, the Corporate Debtor breached the consent terms, and post-dated cheques were bounced, leading to the initiation of the CIRP.

## Facts

Narayan Mangal, the Financial Creditor, provided unsecured loans to Vatsalya Builders and Developers Private Limited, the Corporate Debtor, since 2012. Vatsalya defaulted on the repayment of the principal loan and interest, leading to a Promissory Note. A settlement agreement was reached where Vatsalya agreed to pay Rs. 71,00,000 in installments. Vatsalya issued several cheques, including post-dated cheques, towards the settlement amount. However, these cheques were bounced. Narayan Mangal filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against Vatsalya. The petition was registered as CP(IB) 3701(MB)/2019. The Corporate Debtor had paid an upfront amount of Rs. 6,00,000 as per

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## Issues and analysis

### Issue 1: Whether the nature of the debt is a 'Financial Debt' as defined under section 5(8) of the …

**Ratio:** Section 5(8) of the IBC

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**Reasoning:** The court considered the facts and circumstances, including the loan agreement and the

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**Interpretation:** The court interpreted the definition of 'financial debt' under Section 5(8) of

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**Application:** Based on the facts, the court concluded that the outstanding amount qualified

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## Parties

- **Judges:** ANURADHA SANJAY…; SUCHITRA KANUPARTH…; +1 more
- **Appellants:** Narayan M…
- **Respondents:** Vatsalya Builders…

## Timeline

- **2012-01-01 — Loan Commen…**: Shri Mangal provided unsecured loans to…
- **2019-03-30 — Promissor…**: Vatsalya issued a Promissory Note for an…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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