# In the matter of ASF Insignia SEZ Pvt. Ltd. IB-197-ND-2022

> NCLT judgment dated 2022-08-05. Citation: TCN-2022-NCLT-01434. The case involves an application under Section 9 of the Insolvency and Bankruptcy Code (IBC),…

- **Court:** NCLT
- **Order date:** 5 Aug 2022
- **Citation:** TCN-2022-NCLT-01434
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/asf-insignia-sez-pvt-ltd-ib-197-nd-2022-973a0df0

## Summary

### Background

The case involves an application under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, filed by M/s. Shapoorji Pallonji and Company Pvt. Ltd. against M/s. ASF Insignia SEZ Pvt. Ltd. The applicant claims that the respondent is liable as a corporate debtor based on a 'Comfort Letter' issued by the respondent. The applicant contends that the comfort letter constitutes a guarantee. The respondent argues that the comfort letter does not create a guarantee obligation and that the debt is not an operational debt.

## Facts

M/s. Shapoorji Pallonji and Company Pvt. Ltd. (SPCPL) filed an application under Section 9 of the IBC, 2016, against M/s. ASF Insignia SEZ Pvt. Ltd. (AISPL). SPCPL claimed that AISPL was liable as a corporate debtor based on a 'Comfort Letter' issued by AISPL. The 'Comfort Letter' stated that if BCSPL (another entity) did not make payments for duly certified works delivered by SPCPL, AISPL would intervene and ensure prompt payment. AISPL argued that the 'Comfort Letter' did not create a guarantee obligation. The Adjudicating Authority noted that AISPL merely indicated its intention to get involved and ensure BCSPL complied with its payment obligation in the event of default, without assuming any repayment obligation upon itself. The Adjudicating Authority also

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## Issues and analysis

### Issue 1: Whether the 'Comfort Letter' issued by the respondent constitutes a contract of guarantee under …

**Ratio:** A 'Comfort Letter' cannot be equated with a 'contract of guarantee'. Section 126 of the

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**Reasoning:** The court reasoned that the 'Comfort Letter' merely indicated an intention to ensure

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**Interpretation:** The court interpreted the 'Comfort Letter' based on its contents and the legal

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**Application:** The court applied the ratio to the facts by examining the specific wording of

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## Parties

- **Judges:** P.S.N. P…; RAHUL BHA…
- **Appellants:** M/s. Shapoorji…
- **Respondents:** M/s. ASF Insignia…

## Timeline

- **2018-04-17 — Comfort Lett…**: The Corporate Debtor…
- **2022-06-10 — Previous Tribu…**: Hon'ble Bench declined to admit claim against…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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