# In the matter of L R Builders Private Limited

> NCLT judgment dated 2024-10-07. Citation: TCN-2024-NCLT-00482. The case involves an application (IB-612(ND)/2022) filed by State Bank of India (SBI), the…

- **Court:** NCLT
- **Order date:** 7 Oct 2024
- **Citation:** TCN-2024-NCLT-00482
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/l-r-builders-private-limited-a7873320

## Summary

### Background

The case involves an application (IB-612(ND)/2022) filed by State Bank of India (SBI), the Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. L. R. Builders Private Limited, the Corporate Debtor. SBI claims that the Corporate Debtor defaulted on payments totaling Rs. 203,81,38,395.47/-, including principal, interest, and penal interest. The Corporate Debtor filed a reply affidavit and an application (IA-4749(ND)/2022) under Section 65 of IBC, alleging that SBI filed the Section 7 application fraudulently and with malicious intent, seeking its dismissal. The Hon'ble High Court of Delhi directed the Adjudicating Authority to hear the Section 65 application

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## Facts

State Bank of India (SBI) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against L.R. Builders Private Limited, claiming a default of Rs. 203,81,38,395.47/-. L.R. Builders Private Limited (Corporate Debtor) filed a counter-application under Section 65 of IBC, alleging fraudulent initiation of CIRP by SBI. L.R. Builders was a corporate guarantor for credit facilities availed by P.P. Jewellers (Delhi) from SBI. The credit facilities were sanctioned in December 2011, with a limit of INR 60 Crores. The Corporate Debtor passed a board resolution in December 2011 to provide a corporate guarantee and equitable mortgage. The facilities were renewed periodically. In June 2017, P.P.

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## Issues and analysis

### Issue 1: Whether the Section 7 application filed by State Bank of India was fraudulent and with malicious …

**Ratio:** Section 65 of the IBC provides for penalties for initiating CIRP fraudulently or with

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**Reasoning:** The court reasoned that the guarantee provided by the Corporate Debtor was limited to 12

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**Interpretation:** Section 65 is interpreted to protect corporate debtors from malicious or

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**Application:** The court applied the ratio to the facts and found that the Section 7

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## Parties

- **Judges:** BACHU VENKAT…; ATUL CHAT…
- **Appellants:** State Bank of…
- **Respondents:** M/s. L. R.…

## Timeline

- **2011-12-20 — Initial Credit Facility…**: Petitioner sanctioned credit facility amounting…
- **2011-12-31 — Deed of Gua…**: Deed of Guarantee executed by LR Builders Pvt Ltd in favour of PP Jewellers (Delhi) for…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 62 — Appeal to Supreme Court](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-62)

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