# In the matter of L D Crystals Private Limited

> NCLT judgment dated 2024-09-10. Citation: TCN-2024-NCLT-00635. Jammu and Kashmir Bank, acting as the Financial Creditor, filed a petition under Section 7 of…

- **Court:** NCLT
- **Order date:** 10 Sept 2024
- **Citation:** TCN-2024-NCLT-00635
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/l-d-crystals-private-limited-08c998fe

## Summary

### Background

Jammu and Kashmir Bank, acting as the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate a corporate insolvency resolution process (CIRP) against L.D. Crystals Private Limited, the Corporate Debtor. The Corporate Debtor served as the Corporate Guarantor for credit facilities availed by Gee Ispat Private Limited (the Borrower). The Borrower had approached the Financial Creditor in 2013 seeking credit facilities. The Corporate Debtor was declared ex parte due to non-appearance despite proper notice.

## Facts

In 2013, Gee Ispat Private Limited (the Borrower) sought credit facilities from Jammu and Kashmir Bank (the Financial Creditor) amounting to INR 30,00,00,000. The Borrower initially availed a Cash Credit Facility of INR 20,00,00,000 and an ILC/FLC Limit of INR 10,00,00,000 vide a sanction letter dated 24.01.2013. L.D. Crystals Private Limited (the Corporate Debtor) acted as the Corporate Guarantor, signing an unconditional and irrevocable Corporate Debtor Guarantee on 09.02.2013. The Borrower's accounts became irregular after availing the credit facilities, leading to a failure to regularize the facilities and make payments. The account was declared NPA on 30.06.2014. A Guarantee Invocation Notice dated 31.12.2021 was sent to the Corporate Debtor for an outstanding

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## Issues and analysis

### Issue 1: Whether a financial debt exists between the Petitioner/Financial Creditor and the …

**Ratio:** A guarantee deed dated 09.02.2013 existed between the Petitioner/FC and the

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**Reasoning:** The court reasoned that the documents placed on record by the Petitioner established the

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**Interpretation:** Section 5(8) of the IBC defines 'financial debt' to include any debt along with

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**Application:** The guarantee deed signed by the Corporate Debtor for the credit facilities

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## Parties

- **Judges:** SHRI. MAHENDRA…; SHRI. RAHUL…
- **Appellants:** Jammu & Kashmir…
- **Respondents:** L D Crystals…
- **Advocates:** Syed Ar…; Prateek K…; +2 more

## Timeline

- **2013-01-24 — Sanction…**: Sanction letter issued for Cash…
- **2013-02-09 — Corporate Debtor…**: Corporate Debtor Guarantee signed…

## 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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