# In the matter of Yogiraj Spinning Limited CP (IB) No.139 of 2021

> NCLT judgment dated 2022-12-13. Citation: TCN-2022-NCLT-00174. State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 13 Dec 2022
- **Citation:** TCN-2022-NCLT-00174
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/yogiraj-spinning-limited-cp-ib-no139-of-2021-0069b33b

## Summary

### Background

State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Yogiraj Spinning Ltd. The application was filed due to the Corporate Debtor's default on a debt of Rs. 42,94,10,736.04/- along with interest. The Financial Creditor claimed that the Corporate Debtor had failed to make payments on various credit facilities, including cash credit and term loans. The Corporate Debtor raised objections regarding the maintainability of the petition, limitation, and the authority of the Assistant General Manager to sign the insolvency application. The Financial Creditor argued that the application was within limitation and that the Assistant General Manager had the

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## Facts

State Bank of India (SBI), the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Yogiraj Spinning Ltd., the Corporate Debtor. SBI claimed a default amount of Rs. 42,94,10,736.04/- along with interest at 4.60% above 1 year MCLR till 10.08.2021. SBI had granted cash credit and term loan facilities to the Corporate Debtor. The Corporate Debtor's account became a non-performing asset (NPA) on 28.12.2018. SBI sent a legal notice to the Corporate Debtor on 06.04.2019 for an outstanding amount of Rs. 31,13,63,062.49/-. The application was filed on 17.08.2021. The Corporate Debtor raised objections regarding the maintainability of the petition,

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## Issues and analysis

### Issue 1: Whether the application filed by State Bank of India under Section 7 of the IBC, 2016, for …

**Ratio:** Section 7 of the IBC, 2016 allows a financial creditor to initiate CIRP against a

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had committed a default of the

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**Interpretation:** Section 7 of the IBC provides the mechanism for financial creditors to initiate

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**Application:** In this case, the Financial Creditor, State Bank of India, demonstrated the

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## Parties

- **Judges:** Madan B.…; KAUSHALENDRA…
- **Appellants:** State Bank of…
- **Respondents:** Yogiraj Spinning…
- **Advocates:** Rituraj…; Mandeep…; +1 more

## Timeline

- **2013-07-26 — Initial Sancti…**: The initial letter for sanction of working capital limits/term loan limits/other credit…
- **2015-06-01 — Letter of Arr…**: Another letter of arrangement was signed by the Corporate Debtor for renewal of working…

## 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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