# In the matter of Kaveri Gas Power Private Limited CP(IB)-82-CHE-2021

> NCLT judgment dated 2022-02-04. Citation: TCN-2022-NCLT-04250. ASREC (India) Ltd., the Financial Creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 4 Feb 2022
- **Citation:** TCN-2022-NCLT-04250
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kaveri-gas-power-private-limited-cpib-82-che-2021-50486616

## Summary

### Background

ASREC (India) Ltd., the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Kaveri Gas Power Private Limited, the Corporate Debtor. The Financial Creditor claimed a sum of Rs.50.48 Crores due and payable by the Corporate Debtor. The Corporate Debtor is a guarantor to the principal borrower, Cauvery Power Generation Chennai Private Limited, which was admitted to insolvency on 18.10.2019. The Financial Creditor acquired the loans vide assignment agreement dated 30.12.2020 from State Bank of India.

## Facts

ASREC (India) Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Kaveri Gas Power Private Limited. ASREC claimed Rs. 50.48 Crores was due. Kaveri Gas Power Private Limited acted as a corporate guarantor for Cauvery Power Generation Chennai Private Limited, the principal borrower. The principal borrower was admitted to insolvency on 18.10.2019. ASREC acquired the loan via an assignment agreement dated 30.12.2020 from State Bank of India. A notice invoking the Corporate Guarantee was sent to Kaveri Gas Power Private Limited on 12.02.2021. The Corporate Debtor raised objections regarding limitation, delivery of notice, date of default, and incorrect calculation. The

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the IBC is …

**Ratio:** The liability of the guarantor is coextensive with that of the principal borrower under

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**Reasoning:** The Adjudicating Authority relied on the Supreme Court's decision in Laxmi Pat Surana

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**Interpretation:** Section 7 of the IBC can be invoked against a corporate guarantor when the

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**Application:** In this case, Kaveri Gas Power Private Limited, being the corporate guarantor,

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## Parties

- **Judges:** R. Sucha…; SAMEER…
- **Respondents:** Kaveri Gas Power…
- **Advocates:** Satish Par…; Kumarpal R…; +1 more

## Timeline

- **2013-01-01 — Working Capital…**: Working capital facilities were sanctioned to the principal borrower, Cauvery Power…
- **2018-07-19 — Corporate Guarantee…**: The Corporate Debtor extended Corporate…

## 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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