# In the matter of Calcom Cement India Ltd. C.P.(IB)No. 35-GB-2019

> NCLT judgment dated 2020-01-29. Citation: TCN-2020-NCLT-02145. GuarantCo Ltd., a financial creditor, filed an application under Section 7 of the Insolvency &…

- **Court:** NCLT
- **Order date:** 29 Jan 2020
- **Citation:** TCN-2020-NCLT-02145
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/calcom-cement-india-ltd-cpibno-35-gb-2019-3a3ec677

## Summary

### Background

GuarantCo Ltd., a financial creditor, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Calcom Cement India Ltd., the corporate debtor. The application stems from the corporate debtor's failure to honor its financial obligations under a guarantee agreement. GuarantCo had provided guarantees to Axis Bank Ltd. and HDFC Bank Ltd. on behalf of Calcom Cement. When Calcom Cement defaulted on its loans, the banks invoked the guarantees, and GuarantCo made payments to the banks. Subsequently, GuarantCo and Calcom Cement entered into a Memorandum of Understanding (MOU) to restructure the debt, but disputes arose regarding the applicable interest rate and the interpretation of

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## Facts

GuarantCo Ltd. (Financial Creditor) provided guarantees to Axis Bank Ltd. and HDFC Bank Ltd. for loans availed by Calcom Cement India Ltd. (Corporate Debtor). Calcom Cement defaulted on these loans, leading to the invocation of the guarantees by the banks. GuarantCo paid USD 10,842,267.16 to Axis Bank Ltd. and USD 11,221,084.9 to HDFC Bank Ltd. GuarantCo and Calcom Cement entered into an Amended and Restated Recourse Agreement on 18.05.2009. A Memorandum of Understanding (MOU) was signed on 26.07.2012 to restructure the debt. Calcom Cement made some payments, but disputes arose regarding the applicable interest rate. Calcom Cement claimed the interest rate should be capped as per RBI guidelines, while GuarantCo argued for a fixed rate as per the MOU. RBI rejected

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## Issues and analysis

### Issue 1: Whether the corporate debtor, Calcom Cement India Ltd., committed a default in repayment of its …

**Ratio:** Section 7 of the Insolvency & Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The court found that Calcom Cement India Ltd. had failed to make payments as per the

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**Interpretation:** Section 7 of the IBC is interpreted to mean that if a financial debt exists and

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**Application:** The court applied Section 7 to the facts, noting that the admitted default

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## Parties

- **Judges:** Hari Venkata…
- **Appellants:** Guarantco…
- **Respondents:** Calcom Cement…

## Timeline

- **2007-01-01 — Loan Fac…**: Calcom Cement India Ltd. approached GuarantCo Ltd. to stand as guarantor for loan…
- **2008-11-11 — Deed Exec…**: GuarantCo and Calcom Cement entered into a Deed establishing terms and conditions for…

## 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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