# In the matter of Essel Infraprojects Limited

> NCLT judgment dated 2024-08-28. Citation: TCN-2024-NCLT-00743. Jammu and Kashmir Bank Limited filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 28 Aug 2024
- **Citation:** TCN-2024-NCLT-00743
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/essel-infraprojects-limited-924eea39

## Summary

### Background

Jammu and Kashmir Bank Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Essel Infraprojects Limited, seeking to initiate Corporate Insolvency Resolution Process (CIRP) due to an unresolved financial debt of Rs. 87,43,17,925.37. The debt arose from a long-term working capital facility extended to Pan India Utilities Distribution Company Ltd., secured by a corporate guarantee from Essel Infraprojects Limited and a mortgage on land. Essel Infraprojects Limited argued that its liabilities had been transferred to another entity through a scheme of demerger and amalgamation. The petitioner bank contended that the corporate guarantee remained valid despite the restructuring.

## Facts

Jammu and Kashmir Bank Limited (the Petitioner) extended a long-term working capital facility of INR 200 crores to Pan India Utilities Distribution Company Ltd. This loan was secured by a corporate guarantee from Essel Infraprojects Limited (the Corporate Debtor) and a mortgage on land owned by the Corporate Debtor. Pan India Utilities Distribution Company Ltd. defaulted on the repayment of installments. The Petitioner sent demand notices to the principal borrower. The Corporate Debtor argued that its liabilities had been transferred to another company due to a Scheme of Demerger and a subsequent Scheme of Amalgamation. The Petitioner filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution

…

## Issues and analysis

### Issue 1: Whether the corporate guarantee provided by Essel Infraprojects Limited remained valid despite the …

**Ratio:** The Supreme Court has upheld the enforceability of corporate guarantees, emphasizing that

…

**Reasoning:** The Tribunal found that the Corporate Guarantee remained valid despite the demerger and

…

**Interpretation:** A corporate guarantee remains enforceable even if there is a restructuring of

…

**Application:** In this case, the demerger and amalgamation schemes did not explicitly alter or

…

## Parties

- **Judges:** Reeta K…; Madhu S…
- **Appellants:** Jammu And Kashmir…
- **Respondents:** Essel Infra…; Essel Infraproject…

## Timeline

- **2013-12-17 — Sanction…**: Jammu Kashmir Bank Limited issued a sanction letter bearing no.JKB/AND/PIUDCL/2013-983,…
- **2013-12-27 — Loan Agre…**: Loan agreement dated 27.12.2013/…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/essel-infraprojects-limited-924eea39