# In the matter of Multiple Hotels Private Limited CP (IB) No.204-KB-2019

> NCLT judgment dated 2022-12-29. Citation: TCN-2022-NCLT-00004. Kotak Mahindra Bank Limited filed a petition under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 29 Dec 2022
- **Citation:** TCN-2022-NCLT-00004
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/multiple-hotels-private-limited-cp-ib-no204-kb-2019-b044afe0

## Summary

### Background

Kotak Mahindra Bank Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Multiple Hotels Private Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The petition was based on the corporate debtor's guarantee for credit facilities extended to Multiple Educational and Manpower Development Trust (‘MEMDT'), Camellia Educare Trust ('CET') and Camellia Educare Services Limited (‘CESL'). The financial creditor claimed a default of Rs.21,60,18,331/-. The Corporate Debtor opposed the petition, arguing that the financial creditor had suppressed material facts, including the receipt of Rs.30 Crores and that the application was barred by limitation. The Corporate Debtor also argued that the Financial Creditor has

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## Facts

Kotak Mahindra Bank Limited ('Financial Creditor') extended credit facilities to Multiple Educational and Manpower Development Trust (‘MEMDT'), Camellia Educare Trust ('CET') and Camellia Educare Services Limited (‘CESL'). Multiple Hotels Private Limited ('Corporate Debtor') acted as a corporate guarantor for these credit facilities. The borrowers defaulted on their payments, leading the Financial Creditor to issue a notice under Section 13(2) of the SARFAESI Act, 2002, demanding Rs.14 Crores. The Corporate Debtor challenged this notice before the Debt Recovery Tribunal (DRT), but the proceedings were disposed of. The Corporate Debtor then filed an appeal before the Debt Recovery Appellate Tribunal, which is pending adjudication. The Financial Creditor initiated

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the IBC can be initiated against the Corporate Debtor, …

**Ratio:** The status of the guarantor, who is a corporate person, metamorphoses into corporate

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**Reasoning:** The court relied on the Supreme Court's decision in Laxmi Pat Surana v. Union Bank of

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**Interpretation:** Section 5(5A) of the Code defines 'corporate guarantor'. The definition of

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**Application:** The Corporate Debtor, being a corporate guarantor for the loans availed by the

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## Parties

- **Judges:** Rohit K…; Balraj…; +1 more
- **Respondents:** Multiple Hotels…
- **Advocates:** Jishnu…; Kuldip Mu…; +11 more

## Timeline

- **2012-11-05 — Credit Facilit…**: Financial Creditor sanctioned credit facility of Rs.850 lacs to Multiple Educational and…
- **2012-11-11 — Agreement E…**: An Agreement was executed between the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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