# In the matter of Frugal Developers Private Limited Company Petition No. (IB)-110(ND)-2023

> NCLT judgment dated 2023-07-03. Citation: TCN-2023-NCLT-05389. Covet Financial Services Private Limited filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 3 Jul 2023
- **Citation:** TCN-2023-NCLT-05389
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-new-delhi/frugal-developers-private-limited-company-petition-no-ib-110nd-2023-038a3df0

## Summary

### Background

Covet Financial Services Private Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against Frugal Developers Private Limited due to default on a loan facility agreement.

## Facts

Covet Financial Services Private Limited (Applicant) disbursed a loan of Rs. 1,00,00,000/- to Frugal Developers Private Limited (Respondent) as per a Loan Facility Agreement dated 01.03.2022.

The Respondent failed to adhere to the EMI due dates, leading the Applicant to issue a default letter dated 17.06.2022.

The Respondent requested two months' time to make complete payment, which the Applicant granted, but the Respondent still failed to make the payment.

The Applicant sent a demand notice dated 30.09.2022, but the Respondent did not reply.

The Applicant sent a Loan Recall Notice dated 16.01.2023, calling upon the Respondent to repay the outstanding loan of Rs. 1,00,00,000/- along with interest at 8.25% within 10 days.

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## Issues and analysis

### Issue 1: Whether the Respondent defaulted in repaying the …

**Ratio:** Yes, the Respondent admitted to the default in its reply and failed to repay the debt as

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**Reasoning:** The Respondent's admission of default and the Applicant's documentation of the loan

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**Interpretation:** The default constitutes a breach of the Loan Facility Agreement and triggers

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**Application:** The Adjudicating Authority relied on the Respondent's admission and the

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## Parties

- **Judges:** Sh. Ashok Kumar…; L. N. G…
- **Appellants:** Covet Financial…
- **Respondents:** Frugal Developers…
- **Other parties:** Anil Kumar…
- **Advocates:** Palash S. S…; Lavish…

## Timeline

- **01.03.2022 — Loan Facility…**: Loan Facility Agreement was entered between Covet Financial Services Private Limited and…
- **17.06.2022 — Default L…**: Covet Financial Services Private Limited issued a default letter to Frugal Developers…

## 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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