# In the matter of Jeppiaar Cements Private Limited IBA-685-2019

> NCLT judgment dated 2019-10-10. Citation: TCN-2019-NCLT-01043. The case involves an application filed by Indian Bank, the Financial Creditor, under Section 7…

- **Court:** NCLT
- **Order date:** 10 Oct 2019
- **Citation:** TCN-2019-NCLT-01043
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jeppiaar-cements-private-limited-iba-685-2019-0f66fde7

## Summary

### Background

The case involves an application filed by Indian Bank, the Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Jeppiaar Cements Private Limited, the Corporate Debtor. The Corporate Debtor acted as a guarantor for the principal borrower, M/s. Jeppiaar Power Corporation Private Limited, which defaulted on loan repayments. The outstanding loan amount was ₹147,89,38,608.49 as of 21.12.2018. The Creditor Bank had provided loan facilities to the Principal Borrower as Term Loan-I and Term Loan-II, disbursing ₹91,76,98,358 on 23.11.2013 and ₹42,23,07,534 on 03.12.2016, respectively. The Corporate Debtor provided a Corporate Guarantee based on board resolutions. The

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## Facts

Indian Bank, the Financial Creditor, extended loan facilities to M/s. Jeppiaar Power Corporation Private Limited, the Principal Borrower. M/s. Jeppiaar Cements Private Limited, the Corporate Debtor, acted as a guarantor for these loans. The Principal Borrower defaulted on loan repayments, leading to an outstanding amount of ₹147,89,38,608.49 as of 21.12.2018. The Creditor Bank disbursed ₹91,76,98,358 on 23.11.2013 as Term Loan-I and ₹42,23,07,534 on 03.12.2016 as Term Loan-II. The Corporate Debtor provided a Corporate Guarantee based on board resolutions. The Creditor Bank issued a demand notice on 15.10.2018 to the Principal Borrower and Corporate Guarantors. The Creditor Bank also filed Original Application No.182/2019 before DRT-II, Chennai, for recovery of

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## Issues and analysis

### Issue 1: Whether CIRP can be initiated against the guarantor under Section 7 of the IBC when a resolution …

**Ratio:** The liability of the guarantor is co-extensive with that of the principal borrower, as

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**Reasoning:** The court reasoned that the approval of a resolution plan for the principal borrower does

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**Interpretation:** The court interpreted Section 31 of the IBC as an enabling provision that

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**Application:** The court applied the ratio to the facts of the case, holding that the Creditor

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## Parties

- **Judges:** B.S.V. Prakash…; S. VIJAYARA…
- **Respondents:** M/s. Jeppiaar…
- **Advocates:** Jayesh B…; T.Geethan…; +1 more

## Timeline

- **2013-11-23 — Term Loan-I Dis…**: Creditor Bank disbursed…
- **2016-12-03 — Term Loan-II Disbursemen…**: Creditor Bank disbursed…

## 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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