# In the matter of Future Corporate Resources Private Limited

> NCLT judgment dated 2024-09-24. Citation: TCN-2024-NCLT-00555. Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 24 Sept 2024
- **Citation:** TCN-2024-NCLT-00555
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/future-corporate-resources-private-limited-19ed717e

## Summary

### Background

Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Future Corporate Resources Private Limited, the Corporate Debtor, who acted as a Corporate Guarantor to Syntex Trading and Agency Private Limited (Principal Borrower). The Financial Creditor had sanctioned a term loan to the Principal Borrower, which was guaranteed by the Corporate Debtor. The Principal Borrower defaulted, leading to the loan account being classified as a Non-Performing Asset (NPA). A demand notice was issued to both the Principal Borrower and the Corporate Debtor, but no payments were made, prompting the application for CIRP.

## Facts

Central Bank of India, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Future Corporate Resources Private Limited, the Corporate Debtor. The Corporate Debtor acted as a Corporate Guarantor for a term loan of Rs.155 Crore sanctioned by the Financial Creditor to Syntex Trading and Agency Private Limited (Principal Borrower). The loan was sanctioned on 16.12.2019, and a Term Loan Agreement was executed on 23.12.2019. The Corporate Debtor guaranteed the facilities through a Deed of Guarantee dated 23.12.2019. The Principal Borrower defaulted on 30.09.2020 and requested a One-Time Restructuring (OTR). An OTR was executed on 21.05.2021, and a

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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 Corporate Debtor, as a guarantor, is liable for the debt upon default by the

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**Reasoning:** The NCLT found that the Corporate Debtor acknowledged the existence of debt and default.

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**Interpretation:** The legal principle is that a guarantor's liability arises when the principal

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**Application:** The NCLT applied this principle to the facts, noting that the Financial

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## Parties

- **Judges:** K. R. SAJI…; SANJIV…
- **Respondents:** Future Corporate…
- **Advocates:** Amir Ars…; Abdullah Q…; +6 more

## Timeline

- **2019-12-16 — Sanction…**: Financial Creditor sanctioned a fresh term loan…
- **2019-12-23 — Term Loan Ag…**: Financial Creditor entered into a Term Loan…

## 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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