# In the matter of KSS Petron Private Limited MA 559,609,636 & 689-2018 in CP No. 1202-IBC-NCLT-MB-MAH-2017

> NCLT judgment dated 2018-10-12. Citation: TCN-2018-NCLT-00593. The case involves multiple applications (MA 559/2018, MA 609/2018, MA 636/2018, and MA…

- **Court:** NCLT
- **Order date:** 12 Oct 2018
- **Citation:** TCN-2018-NCLT-00593
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kss-petron-private-limited-ma-559609636-689-2018-in-cp-no-1202-ibc-nclt-mb-mah-2-681236fd

## Summary

### Background

The case involves multiple applications (MA 559/2018, MA 609/2018, MA 636/2018, and MA 689/2018) filed by financial creditors (IDBI Bank, JM Financial Asset Reconstruction Company, Yes Bank, and Axis Bank) against the Resolution Professional (RP) of KSS Petron Private Limited, the Corporate Debtor. The Corporate Insolvency Resolution Process (CIRP) was initiated based on a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016. The IRP made a public announcement for inviting claims. The financial creditors filed their claims, but the RP rejected them on the grounds that the corporate guarantees/bank guarantees were not invoked before the commencement of the CIRP.

## Facts

1. A CIRP was initiated against KSS Petron Private Limited (Corporate Debtor) following a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. IDBI Bank, JM Financial Asset Reconstruction Company (JM ARC), Yes Bank, and Axis Bank (Applicants) filed claims with the Resolution Professional (RP) as financial creditors.
3. IDBI Bank's claim was based on a guarantee provided by the Corporate Debtor for loan facilities extended to M/s. Petron Engineering Construction Limited (PECL).
4. JM ARC's claim was based on a guarantee provided by the Corporate Debtor to M/s. Bhubaneshwar Expressways Private Limited (BEPL), with JM ARC being the assignee of the loan from L&T Infrastructure Finance Company Limited.
5. Yes Bank's claim was based on a guarantee

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## Issues and analysis

### Issue 1: Whether the Resolution Professional (RP) was justified in rejecting the claims of the financial …

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

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**Reasoning:** The NCLT reasoned that the RP should only verify the existence of a right to payment. If

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**Interpretation:** The interpretation of 'claim' under Section 3(6) is broad and inclusive,

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**Application:** The NCLT applied the ratio and reasoning to the facts of the case, holding that

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** IDBI Bank L…
- **Respondents:** M/s. KSS Petron…; Mohan Lal…

## Timeline

- **2017-08-01 — Admission of…**: Petition U/s. 10 of the Insolvency and Bankruptcy Code, 2016 filed by the Corporate…
- **2017-08-01 — Moratori…**: The ‘Moratorium' had…

## 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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