# 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-02039. 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-02039
- **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-2020-51eb7e15

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, by Syndicate Bank (now merged with Canara Bank) against M/s Kranthi Edifice Private Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed that the Corporate Debtor had defaulted on repayment and interest payments on loan accounts. The Corporate Debtor contested the application, arguing that the insolvency proceedings were fraudulent and malicious, stemming from wrongful invocation of bank guarantees. The Corporate Debtor also claimed that the Financial Creditor had unilaterally invoked bank guarantees and converted non-fund-based liabilities into fund-based liabilities, leading to financial

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## Facts

Syndicate Bank (now Canara Bank) filed an application under Section 7 of the IBC, 2016, against Kranthi Edifice Private Limited, claiming default in repayment of loan accounts. The Corporate Debtor had availed both fund-based and non-fund-based credit facilities from the Financial Creditor. The Corporate Debtor argued that the insolvency proceedings were fraudulent and malicious due to wrongful invocation of bank guarantees. The Corporate Debtor claimed the Financial Creditor unilaterally invoked bank guarantees, converting non-fund-based liabilities into fund-based liabilities. The Financial Creditor issued a notice on 29.08.2018 demanding outstanding amount of Rs.23,96,08,502/-. As of 30.11.2019, the amount due on secured overdraft facility was Rs.74,52,87,564.93,

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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 had

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**Interpretation:** The ruling of the Supreme Court clarifies that the adjudicating authority's

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**Application:** The Tribunal applied the Supreme Court's ruling to the facts of the case,

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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 was…
- **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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