# In the matter of Deepsea Developers Private Limited CP-1153-IB-2018

> NCLT judgment dated 2019-03-18. Citation: TCN-2019-NCLT-04394. The case involves a Company Petition filed under Section 7 of the Insolvency & Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 18 Mar 2019
- **Citation:** TCN-2019-NCLT-04394
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/deepsea-developers-private-limited-cp-1153-ib-2018-75122ad1

## Summary

### Background

The case involves a Company Petition filed under Section 7 of the Insolvency & Bankruptcy Code by City Union Bank (the Financial Creditor) for initiating the Corporate Insolvency Resolution Process (CIRP) against Deepsea Developers Private Limited (the Corporate Guarantor). The Principal Debtor, St. John Freight Systems Limited, defaulted in repaying a financial debt of ₹16,83,31,642. City Union Bank had sanctioned credit facilities for ₹17.45 crores to St. John Freight System Limited, with Deepsea Developers Private Limited acting as the Corporate Guarantor.

## Facts

City Union Bank Limited, the Financial Creditor, sanctioned credit facilities amounting to ₹17.45 crores to St. John Freight System Limited, the Principal Debtor. Deepsea Developers Private Limited acted as the Corporate Guarantor for this loan, guaranteeing all amounts payable by the Principal Debtor. St. John Freight Systems Limited defaulted on repaying a financial debt of ₹16,83,31,642. The Creditor Bank invoked the corporate guarantee on 29th July 2016. The Financial Creditor filed an application under Section 7 of the Insolvency & Bankruptcy Code to initiate Corporate Insolvency Resolution Proceedings (CIRP) against Deepsea Developers Private Limited. The Financial Creditor furnished material disclosing the debt and default, including a certificate of

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## Issues and analysis

### Issue 1: Whether the Corporate Guarantor becomes a Corporate Debtor as soon as a guarantee agreement is …

**Ratio:** Section 5(8) of the I&B Code defines 'Financial Debt' as including 'the amount of any

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**Reasoning:** The Tribunal relied on Section 5(8) of the I&B Code and the NCLAT judgment in Ferro

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**Interpretation:** Section 5(8) clarifies that a financial debt includes any liability arising

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**Application:** In this case, Deepsea Developers Private Limited acted as the Corporate

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## Parties

- **Judges:** B.S.V. Prakash…; S. VIJAYARA…
- **Respondents:** M/s. Deepsea…
- **Advocates:** A. Karthi…; Pawan Jh…

## Timeline

- **2012-11-19 — Loan Sanc…**: Initially loan was sanctioned to the tune of Rs.6 crores as OLCC Facility to the…
- **2012-11-17 — Execution of Security…**: The CD executed various Security Documents/ Agreement of Guarantee for the credit…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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