# In the matter of Warm Forging Pvt. Ltd. & Ors. CP No. (IB) - 313-7-JPR-2019

> NCLT judgment dated 2022-02-07. Citation: TCN-2022-NCLT-04243. M/s Reckon Industries Limited and others filed an application under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 7 Feb 2022
- **Citation:** TCN-2022-NCLT-04243
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/warm-forging-pvt-ltd-ors-cp-no-ib-313-7-jpr-2019-051cf08f

## Summary

### Background

M/s Reckon Industries Limited and others filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against M/s Warm Forging Pvt. Ltd. The applicant claimed to be a financial creditor, asserting that the respondent defaulted in repaying a loan amount of Rs. 3.50 crores. The applicant had previously filed a similar application, which was withdrawn based on a settlement agreement. The respondent argued that the amount provided was not a loan but a share application money and that there was no default. The applicant contended that the corporate debtor admitted its liability in emails and balance sheets.

## Facts

M/s Reckon Industries Limited, along with Mr. Jai Prakash Aggarwal, Mr. Sandeep Aggarwal, and Mrs. Sumitra Aggarwal, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against M/s Warm Forging Pvt. Ltd., claiming to be financial creditors. The applicants sought to initiate the Corporate Insolvency Resolution Process (CIRP) due to a default in repayment of a loan amount of Rs. 3.50 crores. The financial creditor had advanced a loan of Rs. 3,50,00,000/- to the corporate debtor. The corporate debtor initially approached the financial creditor to participate in the bidding process for a US-based firm, M/s Sona BLW Precision Forge Inc. ('SPF'). A special-purpose entity, M/s Selma Precision Technologies ('SPT'), was formed to participate in the

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is maintainable …

**Ratio:** The trigger for initiation of the Corporate Insolvency Resolution Process by the

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**Reasoning:** The Adjudicating Authority considered the documents filed by the Applicant and found that

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a

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**Application:** In this case, the Corporate Debtor defaulted on the payment of the claim

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## Parties

- **Judges:** Deep Chandr…; RaghuNa…
- **Appellants:** M/s. Reckon…
- **Respondents:** M/S WARM FORGING…
- **Advocates:** Ravi Chi…; Anurag…

## Timeline

- **2016-12-02 — Disbursement…**: Rs. 1,40,00,000/- was…
- **2016-12-08 — Disbursement…**: Rs. 25,00,000/- was…

## 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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