# In the matter of Baliraja Sakhar Karkhana Limited

> NCLT judgment dated 2023-10-06. Citation: TCN-2023-NCLT-01365. The case involves a petition filed by Netafim Agricultural Financing Agency Private Limited…

- **Court:** NCLT
- **Order date:** 6 Oct 2023
- **Citation:** TCN-2023-NCLT-01365
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/baliraja-sakhar-karkhana-limited-95286aa1

## Summary

### Background

The case involves a petition filed by Netafim Agricultural Financing Agency Private Limited (NAFA), a non-banking finance company, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Baliraja Sakhar Karkhana Limited, the Corporate Debtor. NAFA claimed that the Corporate Debtor defaulted on a debt of Rs. 1,33,68,915/-. The debt arose from a Tripartite Agreement where the Corporate Debtor was responsible for recommending farmers for micro-irrigation systems, and NAFA provided financial assistance to these farmers. The Corporate Debtor also provided a Deed of Guarantee to repay the loans of defaulting farmers.

## Facts

Netafim Agricultural Financing Agency Private Limited (NAFA) filed a petition under Section 7 of the IBC against Baliraja Sakhar Karkhana Limited, seeking initiation of CIRP. NAFA is a non-banking finance company that provides financial solutions to borrowers in the micro-irrigation and agricultural sector. The Corporate Debtor is engaged in the production of sugar from sugarcane crops. A Tripartite Agreement existed between NAFA, Netafim Irrigation India Private Limited (NIIPL), and the Corporate Debtor, where the Corporate Debtor recommended farmers for micro-irrigation systems, and NAFA provided financial assistance. The Corporate Debtor also entered into a Deed of Guarantee, guaranteeing the repayment of loans to defaulting farmers. As of March 31, 2021, 110

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted on its obligations under the Deed of Guarantee, justifying …

**Ratio:** A guarantor is obligated to fulfill the guaranteed obligations upon the principal

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**Reasoning:** The NCLT reasoned that the Corporate Debtor had provided a Deed of Guarantee,

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**Interpretation:** The Deed of Guarantee is interpreted as a binding agreement where the Corporate

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**Application:** The ratio and reasoning are applied to the facts by finding that the Corporate

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## Parties

- **Judges:** Anu Jagmoha…; KISHORE VEMULAPALL…
- **Appellants:** NETAFIM AGRICULTUR…
- **Respondents:** BALIRAJA SAKHAR…

## Timeline

- **2013-10-03 — Deed of Gua…**: Corporate Debtor entered into a continuing Deed of Guarantee guaranteeing the Financial…
- **2021-03-31 — Farmer De…**: 110 farmer-borrowers are in default and have…

## 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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