# In the matter of State Bank of India vs. L.R. Builders Pvt. Ltd.

> NCLAT judgment dated 2025-05-23. Citation: TCN-2025-NCLAT-00017. The case involves an appeal filed by the State Bank of India (SBI) against an order passed by…

- **Court:** NCLAT
- **Order date:** 23 May 2025
- **Citation:** TCN-2025-NCLAT-00017
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/state-bank-of-india-vs-lr-builders-pvt-ltd-120b6e79

## Summary

### Background

The case involves an appeal filed by the State Bank of India (SBI) against an order passed by the National Company Law Tribunal (NCLT), New Delhi Bench, which dismissed SBI's Section 7 application under the Insolvency and Bankruptcy Code (IBC) seeking initiation of Corporate Insolvency Resolution Process (CIRP) against L.R. Builders Pvt. Ltd. The NCLT also allowed an application filed by L.R. Builders under Section 65 of the IBC, alleging that SBI had initiated insolvency proceedings with fraudulent and malicious intent. The appeal before the NCLAT challenges the NCLT's findings and observations, particularly regarding allegations of malafide intent and abuse of process.

## Facts

The State Bank of India (SBI) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against L.R. Builders Pvt. Ltd. (LRB), a corporate guarantor for loans extended to P.P. Jewellers (Delhi). The NCLT dismissed SBI's application and allowed LRB's application under Section 65 of the IBC, alleging fraudulent initiation of CIRP. SBI had sanctioned a working capital facility of Rs.40 Crores to P.P. Jewellers on 23.02.2012, secured by a corporate guarantee from LRB. Previously, the State Bank of Bikaner and Jaipur (e-SBBJ) had sanctioned a term loan of Rs.60 Crores to P.P. Jewellers on 31.12.2011, also secured by LRB's guarantee. The loan facilities were renewed periodically, with LRB signing revival letters and sanction letters. The borrower's

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## Issues and analysis

### Issue 1: Whether the NCLT's findings of fraud and collusion against SBI were justified in dismissing the …

**Ratio:** The Hon'ble Supreme Court's in ‘Kranti Associates v. Masood Ahmed Khan’ [(2010) 10 SCR

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**Reasoning:** The NCLAT finds that the NCLT reached its conclusion about fraud and collusion without

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**Interpretation:** The NCLAT interprets the Supreme Court's ruling to mean that judicial orders

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**Application:** The NCLAT applies this ratio to the present case by finding that the NCLT's

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## Parties

- **Judges:** Indevar P…
- **Appellants:** State Bank of…
- **Respondents:** M/s L.R. Builders…

## Timeline

- **2011-12-31 — Term Loan San…**: The erstwhile State Bank of Bikaner and Jaipur (e-SBBJ) sanctioned a term loan of Rs.60…
- **2012-02-23 — Working Capital Loan…**: The Appellant (SBI) sanctioned a working capital loan of Rs.40 Crores to the same…

## 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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