# In the matter of Electro Steel Castings Limited C.P (IB) No. 16-CB-2021

> NCLT judgment dated 2022-06-24. Citation: TCN-2022-NCLT-04642. UV Asset Reconstruction Company Limited filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 24 Jun 2022
- **Citation:** TCN-2022-NCLT-04642
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-cuttack/electro-steel-castings-limited-cp-ib-no-16-cb-2021-a06065b1

## Summary

### Background

UV Asset Reconstruction Company Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Electrosteel Castings Limited, claiming default on a financial debt.

## Facts

SREI Infrastructure Finance Limited sanctioned a loan of INR 500,00,00,000/- to Electrosteel Steels Limited (ESL).

Electrosteel Castings Limited (ECL) executed a Deed of Undertaking, Warranty and Indemnity in favor of SREI.

ECL created a mortgage by deposit of title deeds in favor of SREI over its factory land in Elavur, Tamil Nadu.

State Bank of India initiated CIRP against ESL, which was admitted by the NCLT, Kolkata Bench.

Vedanta Limited's resolution plan for ESL was approved, bifurcating the debt into sustainable and unsustainable portions.

UV Asset Reconstruction Company Limited (UVARCL) acquired rights from SREI via an Assignment Agreement.

UVARCL filed a Section 7 petition against ECL, claiming it defaulted on a financial debt as a guarantor.

…

## Issues and analysis

### Issue 1: Whether Electrosteel Castings Limited (ECL) is a guarantor to the debts of Electrosteel Steels …

**Ratio:** An obligation to arrange for infusion of funds to the borrower is not a guarantee in

…

**Reasoning:** The NCLT found that the Deed of Undertaking required ECL to arrange for the infusion of

…

**Interpretation:** The terms of the undertaking did not satisfy the requirements of a guarantee

…

**Application:** The NCLT held that ECL was not a guarantor and therefore did not owe a

…

## Parties

- **Judges:** P. Moha…; Satya Ranjan…
- **Appellants:** UV Asset Reconstru…; UV Asset Reconstru…
- **Respondents:** Electrosteel…
- **Advocates:** Joy S…; Swatarup Ba…; +10 more

## Timeline

- **2011-07-26 — Loan Agre…**: A rupee loan agreement number SRE-212 was executed between SREI Infrastructure Finance…
- **2011-07-27 — Deed of Unde…**: ESL, SREI and the CD entered into a Deed of…

## 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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