# In the matter of Ashoka Hi-Tech Builders Private
Limited IA-164(MP)2022 & CP(IB) 16 of 2020

> NCLT judgment dated 2023-01-06. Citation: TCN-2023-NCLT-05169. The case involves an application filed by L&T Housing Finance Limited (later replaced by…

- **Court:** NCLT
- **Order date:** 6 Jan 2023
- **Citation:** TCN-2023-NCLT-05169
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ashoka-hi-tech-builders-private-limited-ia-164mp2022-cpib-16-of-2020-1d54a11d

## Summary

### Background

The case involves an application filed by L&T Housing Finance Limited (later replaced by Edelweiss Asset Reconstruction Company Limited) under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Ashoka Hi-Tech Builders Private Limited. The application pertains to a default amount of Rs. 57,48,58,016 as of November 30, 2019, stemming from a loan given to JSM Devcons Private Limited, for which Ashoka Hi-Tech acted as a corporate guarantor. The financial creditor invoked the guarantee due to the principal borrower's failure to repay the debt. The corporate debtor raised objections, arguing that the loan was primarily secured by other guarantees and that the corporate guarantee should not be

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## Facts

L&T Housing Finance Limited (later replaced by Edelweiss Asset Reconstruction Company Limited) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against Ashoka Hi-Tech Builders Private Limited due to a default of Rs. 57,48,58,016 as of November 30, 2019. The default stemmed from a loan of Rs. 38,00,00,000 given to JSM Devcons Private Limited, for which Ashoka Hi-Tech acted as a corporate guarantor. A corporate guarantee deed was executed on November 30, 2015. The principal borrower failed to repay the debt, leading the financial creditor to invoke the guarantee via a notice dated November 23, 2017. The corporate debtor purchased land on March 23, 2009, and entered into a development agreement with the principal

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The court found that the corporate debtor had committed a default of the financial debt

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** The court applied Section 7 to the facts of the case, finding that the

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## Parties

- **Judges:** Madan B.…; KAUSHALENDRA…
- **Appellants:** Ashoka Hi-Tech…
- **Respondents:** Ashoka Hi-Tech…; L&T Housing…

## Timeline

- **2017-11-24 — Date of D…**: The date on which the…
- **2017-11-23 — Notice Invoking…**: Financial creditor sent a notice to the…

## 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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