# In the matter of Clarion Townships Pvt. Ltd. IB-410-(ND)-2020

> NCLT judgment dated 2022-04-22. Citation: TCN-2022-NCLT-03124. The case involves an application filed by Canara Bank (formerly Syndicate Bank) under Section 7…

- **Court:** NCLT
- **Order date:** 22 Apr 2022
- **Citation:** TCN-2022-NCLT-03124
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/clarion-townships-pvt-ltd-ib-410-nd-2020-5beee201

## Summary

### Background

The case involves an application filed by Canara Bank (formerly Syndicate Bank) under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Clarion Townships Pvt. Ltd. and M/s Linaks Microelectronics Ltd. for defaulting on a loan of Rs. 25,69,65,915/-. Clarion Townships Pvt. Ltd. was undergoing CIRP under a separate order. Linaks Microelectronics Ltd. was the owner of the land on which Clarion Townships Pvt. Ltd. was developing a residential complex. A development agreement was entered into between the two companies. Canara Bank sanctioned a term loan to Clarion Townships Pvt. Ltd., with Linaks Microelectronics Ltd. acting as a corporate guarantor. The loan was disbursed in tranches, but Clarion

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## Facts

Syndicate Bank (now Canara Bank) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Clarion Townships Pvt. Ltd. and M/s Linaks Microelectronics Ltd. for a default of Rs. 25,69,65,915/-. Clarion Townships Pvt. Ltd. was already undergoing CIRP under a separate order. Linaks Microelectronics Ltd. owned the land on which Clarion Townships Pvt. Ltd. was developing a residential complex. A development agreement was in place between the two companies. Canara Bank sanctioned a term loan of Rs. 30,00,00,000/- to Clarion Townships Pvt. Ltd., with Linaks Microelectronics Ltd. acting as a corporate guarantor. Rs. 19,00,00,000 was disbursed. Clarion Townships Pvt. Ltd. failed to

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## Issues and analysis

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

**Ratio:** The Insolvency and Bankruptcy Code, 2016, does not bar the initiation of CIRP against

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**Reasoning:** The Adjudicating Authority relied on the judgments of the NCLAT and the Supreme Court,

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**Interpretation:** Section 60(2) and (3) of the IBC are interpreted to mean that there is no legal

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**Application:** In this case, the Adjudicating Authority held that CIRP could be initiated

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## Parties

- **Judges:** P.S.N. P…; RAHUL BHA…
- **Respondents:** M/S Clarion…

## Timeline

- **2012-04-06 — Development A…**: CD No.2 entered into a Development Agreement with the CD No.1 to develop the residential…
- **2014-08-29 — Sanction…**: FC vide sanction letter dated 29.08.2014 sanctioned a term loan of Rs. 30,00,00,000/- in…

## 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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