# In the matter of SVEC Constructions Private Limited CP (IB) No. 326-7-HDB-2020

> NCLT judgment dated 2021-01-08. Citation: TCN-2021-NCLT-03355. The case involves an application filed by State Bank of India (SBI), the Financial Creditor,…

- **Court:** NCLT
- **Order date:** 8 Jan 2021
- **Citation:** TCN-2021-NCLT-03355
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/svec-constructions-private-limited-cp-ib-no-326-7-hdb-2020-c1110d6a

## Summary

### Background

The case involves an application filed by State Bank of India (SBI), the Financial Creditor, against SVEC Constructions Private Limited, the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Corporate Debtor had availed term loan and working capital loan facilities from SBI and other banks since 2005. These facilities were restructured in 2013 under a CDR mechanism. The Corporate Debtor defaulted on adhering to the sanction terms, leading to the accounts being classified as NPA. SBI filed an O.A. before the DRT, Hyderabad, to recover the outstanding amount. SBI invoked bank guarantees issued at the request of the Corporate Debtor due to non-payment, leading to the current application for initiating CIRP.

## Facts

SVEC Constructions Private Limited (Corporate Debtor) availed term loan and working capital facilities from State Bank of India (SBI) and other banks since 2005. In 2013, the credit facilities were restructured under a CDR mechanism. The Corporate Debtor defaulted on the restructured facilities, leading to the accounts being classified as Non-Performing Assets (NPA). SBI filed an Original Application (OA) before the Debt Recovery Tribunal (DRT), Hyderabad, to recover the outstanding amount. SBI had issued bank guarantees (BGs) at the request of the Corporate Debtor. Four BGs were invoked by the beneficiaries in January and October 2019. The Corporate Debtor failed to pay the amounts due under the invoked BGs. SBI honored its commitment under the BGs and remitted the

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a corporate

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**Reasoning:** The Adjudicating Authority considered the submissions and documents filed by the

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**Interpretation:** Section 7 provides the mechanism for financial creditors to trigger the

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**Application:** The Financial Creditor demonstrated that the Corporate Debtor had defaulted on

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## Parties

- **Judges:** Shri. K. Anantha…; BINOD KUMAR…
- **Appellants:** State Bank of…
- **Respondents:** SVEC Constructions…

## Timeline

- **2005-01-01 — Loan Facilitie…**: Corporate Debtor availed term loan and working capital loan facilities from the Applicant…
- **2013-01-01 — Restructuring of Credit…**: Consortium Banks restructured the…

## 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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