# In the matter of Kunal Structure (India) Private Limited

> NCLT judgment dated 2025-01-10. Citation: TCN-2025-NCLT-00633. Kotak Mahindra Bank Limited filed an application under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 10 Jan 2025
- **Citation:** TCN-2025-NCLT-00633
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kunal-structure-india-private-limited-4dc93ca0

## Summary

### Background

Kotak Mahindra Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Kunal Structure (India) Private Limited, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The corporate debtor is an MSME in the construction business and had availed loan facilities, including those under the Emergency Credit Line Guarantee Scheme (ECLGS). The applicant claimed a default amount of Rs. 18,11,06,790.12 as of 19.01.2022. The respondent opposed the application, citing defects, the existence of arbitral awards in its favor, and the applicant's failure to invoke the ECLGS guarantee. The NCLT initially kept the proceedings in abeyance to allow the corporate debtor to settle the dues, but the default persisted.

## Facts

Kotak Mahindra Bank Limited (the applicant/financial creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against Kunal Structure (India) Private Limited (the respondent/corporate debtor) to initiate Corporate Insolvency Resolution Process (CIRP). The corporate debtor is an MSME engaged in the construction business. The applicant claimed a default of Rs. 18,11,06,790.12 as of 19.01.2022, arising from various Construction Equipment Loans. The loans were sanctioned between 01.09.2017 and 17.03.2021. Some of the loans were sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) announced by the Ministry of Finance on 13.05.2020. The respondent executed various documents, including guarantees and Demand Promissory

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of IBC can be admitted without the financial creditor …

**Ratio:** The NCLT relied on the principles laid down in Vidarbha Industries Power Ltd V. Axis

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**Reasoning:** The NCLT reasoned that the applicant's failure to invoke the ECLGS guarantee was a

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**Interpretation:** The NCLT interpreted the ECLGS scheme as a facility or line of credit available

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**Application:** The NCLT applied the ratio and reasoning to the specific facts of the case,

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## Parties

- **Judges:** Chitra Ha…; Velamur G Venkata…
- **Appellants:** Kotak Mahindra…
- **Respondents:** Kunal Structure…

## Timeline

- **2017-09-01 — Loan Sanc…**: Loan facilities were sanctioned to the Corporate Debtor starting from 01.09.2017 to…
- **2020-05-13 — ECLGS Sc…**: Emergency Credit Line Guarantee Scheme announced by the Ministry of Finance, GOI on…

## 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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