# In the matter of Avantha Power & Infrastructure Ltd.

> NCLT judgment dated 2023-10-25. Citation: TCN-2023-NCLT-01026. This Interlocutory Application No.656 of 2022 was filed under Section 60(5) of the Insolvency…

- **Court:** NCLT
- **Order date:** 25 Oct 2023
- **Citation:** TCN-2023-NCLT-01026
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/avantha-power-infrastructure-ltd-99844862

## Summary

### Background

This Interlocutory Application No.656 of 2022 was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the National Company Law Tribunal Rules, 2016, in the matter of CP(IB) No.141 of 2019 against the rejection of the applicant's claim dated 24.02.2022 by the IRP for Rs.917,64,76,353.28/-. The applicant, formerly Yes Bank, filed the claim via FORM C as a "Financial Creditor" on account of securities provided by the “Corporate Debtor” to secure the repayment of loan granted under the name of M/s. Avantha Holdings Limited and M/s. Oyster Buildwell Private Limited. The applicant had extended term loans to M/s Avantha Holdings Limited and M/s Oyster Buildwell Private Limited in the years 2015, 2016 and 2017.

## Facts

In 2015, 2016, and 2017, Yes Bank (now J.C. Flowers Asset Reconstruction Pvt Ltd) extended term loans to Avantha Holdings Limited and Oyster Buildwell Private Limited. A term loan of INR 500 Crores was granted to Avantha Holdings Limited vide facility letter dated 20.10.2015, and a facility agreement was executed on 28.10.2015. Another term loan of INR 230 Crores was granted to Avantha Holdings Limited vide facility letter dated 13.07.2016, and a facility agreement was executed on 17.08.2016. A term loan of INR 515 Crores was granted to Oyster Buildwell Private Limited vide facility letter dated 29.12.2017, and a facility agreement was executed on 05.01.2018. Avantha Power and Infrastructure Limited provided securities for these facilities, including a pledge over

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## Issues and analysis

### Issue 1: Whether the Respondent No.1 should admit the claim of the Applicant (Erstwhile Yes Bank) against …

**Ratio:** The pledge agreement by a third party does not amount to a guarantee. The liability is

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**Reasoning:** The court reasoned that the Corporate Debtor is liable to pay only the amount he is

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**Interpretation:** The court interpreted the pledge agreement as not amounting to a guarantee, and

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**Application:** The court applied the ratio to the facts of the case, noting that the Corporate

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## Parties

- **Judges:** SHAMMI…; SAMEER…
- **Appellants:** J.C. Flowers…
- **Respondents:** Avantha Power and…; Srikanth Dwarkanat…

## Timeline

- **2022-02-24 — Rejection o…**: The applicant's claim…
- **2023-08-28 — One Time Set…**: A one-time settlement was executed…

## 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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