# In the matter of DMC Infrastructure Private Limited IB-804-ND-2020

> NCLT judgment dated 2021-04-15. Citation: TCN-2021-NCLT-02378. Corporation Bank, the Financial Creditor (FC), filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 15 Apr 2021
- **Citation:** TCN-2021-NCLT-02378
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/dmc-infrastructure-private-limited-ib-804-nd-2020-720088e2

## Summary

### Background

Corporation Bank, the Financial Creditor (FC), filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against DMC Infrastructure Private Limited, the Corporate Debtor (CD). The CD acted as a corporate guarantor for two principal borrowers, J.B. Gold Private Limited and Roshini Jewellers Private Limited. The FC had sanctioned Overdraft (OD) facilities to these principal borrowers, and the CD had executed guarantee agreements in favor of the FC. Both principal borrowers defaulted on their loan repayments, leading to their accounts being declared Non-Performing Assets (NPAs). The FC issued notices under Section 13(2) of the SARFAESI Act and filed recovery suits before the Debt

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## Facts

Corporation Bank (FC) sanctioned Overdraft (OD) facilities to principal borrowers Roshini Jewellers Pvt Ltd and J.B. Gold Pvt Ltd. DMC Infrastructure Pvt Ltd (CD) acted as a corporate guarantor for these loans. The OD facility sanctioned to Roshini Jewellers Pvt Ltd was for Rs 9.00 crore on 2013-06-25, and a guarantee agreement was executed by CD on 2013-06-27. Similarly, an OD facility of Rs 9.00 crore was sanctioned to J.B. Gold Pvt Ltd on 2013-06-25, with a guarantee agreement executed by CD on 2013-06-27. Both principal borrowers failed to repay the loan amounts, and their accounts were declared NPAs on 2017-06-16 and 2017-09-30, respectively. The FC issued notices under section 13(2) of the SARFAESI Act and filed recovery suits before the Debt Recovery Tribunal

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## Issues and analysis

### Issue 1: Whether the application filed by Corporation Bank under Section 7 of the Insolvency and Bankruptcy …

**Ratio:** Section 5(8)(i) of the Code defines 'financial debt' to include the amount of any

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**Reasoning:** The Adjudicating Authority considered the provisions of Section 5(8)(i) of the Code and

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**Interpretation:** Section 5(8)(i) broadens the scope of 'financial debt' to include liabilities

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**Application:** DMC Infrastructure Private Limited provided guarantees for the OD facilities

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## Parties

- **Judges:** ABNI RANJAN KUMAR…; K.K. V…
- **Appellants:** Corporatio…
- **Respondents:** DMC Infrastructure…

## Timeline

- **2008-05-19 — Incorporation of DMC…**: DMC Infrastructure Pvt…
- **2013-06-25 — FC Sanctioned OD…**: FC sanctioned Overdraft (OD) facility of Rs 9.00 crore in favour of principal borrower,…

## 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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