# In the matter of Kranthi Edifice Private Limited IA No. 18 of 2020 in CP (IB) No. 109-7-HDB-2020

> NCLT judgment dated 2022-06-27. Citation: TCN-2022-NCLT-02035. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 27 Jun 2022
- **Citation:** TCN-2022-NCLT-02035
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kranthi-edifice-private-limited-ia-no-18-of-2020-in-cp-ib-no-109-7-hdb-2020-0af54d71

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 by Syndicate Bank (later merged with Canara Bank) against M/s Kranthi Edifice Private Limited, the Corporate Debtor, due to defaults in loan repayment and interest payments. The Corporate Debtor contested the application, arguing that the insolvency proceedings were fraudulent and malicious, stemming from wrongful invocation of bank guarantees. The Financial Creditor claimed that the Corporate Debtor availed fund-based and non-fund-based credit facilities, defaulted on payments, and acknowledged the debt. The Corporate Debtor argued that the invocation of bank guarantees was illegal and that the Financial Creditor acted with mala fide intention.

## Facts

Syndicate Bank, later merged with Canara Bank, extended fund-based and non-fund-based credit facilities to Kranthi Edifice Private Limited. The Corporate Debtor defaulted on repayment, leading the Financial Creditor to file an application under Section 7 of the IBC. The Corporate Debtor argued that the insolvency proceedings were fraudulent due to wrongful invocation of bank guarantees worth Rs. 8.40 crores by beneficiaries, which the Financial Creditor honored. The Corporate Debtor claimed the Financial Creditor unilaterally converted non-fund-based liability into fund-based liability, declaring the account NPA. The Corporate Debtor also filed writ petitions in the High Court challenging the Financial Creditor's actions. The Financial Creditor contended that the

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## Issues and analysis

### Issue 1: Whether there is a financial debt as claimed by the applicant which is due and payable by the …

**Ratio:** The Hon'ble Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank & another

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**Reasoning:** The Tribunal noted that the Corporate Debtor had availed credit facilities and defaulted

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**Interpretation:** The existence of a financial debt and default are the primary requirements for

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**Application:** The Corporate Debtor's acknowledgment of debt, the balance sheet entries, and

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## Parties

- **Judges:** Dr.Venkata…; SH. VEERA BRAHMA…
- **Appellants:** Syndicate…
- **Respondents:** Kranthi Edifice…; Kranthi Edifice…

## Timeline

- **2012-05-18 — Incorporation of…**: Kranthi Edifice Private Limited…
- **2013-02-07 — Sanction and Disbursemen…**: Financial Creditor sanctioned and disbursed…

## 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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