# In the matter of Edu Smart Services Private Limited (IB)-102-(PB)-2017

> NCLT judgment dated 2017-10-27. Citation: TCN-2017-NCLT-00257. Axis Bank Limited filed an application under Section 60(5) of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 27 Oct 2017
- **Citation:** TCN-2017-NCLT-00257
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/edu-smart-services-private-limited-ib-102-pb-2017-64f9adcb

## Summary

### Background

Axis Bank Limited filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking to set aside the Resolution Professional's decision rejecting its claim. The claim was rejected because the corporate guarantee was invoked after the commencement of the insolvency process. Axis Bank sought a direction to the Resolution Professional to accept its claim as a Financial Creditor of Edu Smart Services Pvt. Ltd., the Corporate Debtor, based on the invocation of a corporate guarantee.

## Facts

DBS Bank Limited, a Financial Creditor, initiated Corporate Insolvency Resolution Process (CIRP) against Edu Smart Services Private Limited, the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code (IBC). Axis Bank Limited, the applicant, filed a claim before the Resolution Professional based on a corporate guarantee provided by Edu Smart Services in favor of Educomp Solutions Ltd. The Resolution Professional rejected the claim, stating that the corporate guarantee had not been invoked before the commencement of the CIRP. Axis Bank invoked the corporate guarantee after the CIRP commencement date. Educomp Solutions Ltd., the principal borrower, is also undergoing CIRP. The corporate guarantee furnished by the Corporate Debtor is valued at Rs. 2048

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## Issues and analysis

### Issue 1: Whether the Axis Bank Ltd.-applicant is entitled to make a claim by invoking the corporate …

**Ratio:** A claim based on a corporate guarantee invoked after the commencement of the insolvency

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**Reasoning:** The court reasoned that the debt had not become due from the Corporate Debtor on the

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**Interpretation:** The court interpreted Section 14 of the Code to mean that the moratorium

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**Application:** The court applied the ratio and reasoning to the facts of the case, noting that

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## Parties

- **Judges:** M. M. K…; DeepaKr…
- **Appellants:** Axis Bank L…
- **Respondents:** Edu Smart…

## Timeline

- **2017-06-27 — CIRP Commen…**: Corporate Insolvency Resolution Process (CIRP) commenced against Edu Smart Services…
- **2017-07-20 — IRP Communi…**: IRP communicated that the claim cannot be verified as the corporate guarantee had not…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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