# In the matter of Subi Chemicals Private Limited CP (IB) 338-NCLT-AHM-2020

> NCLT judgment dated 2022-11-25. Citation: TCN-2022-NCLT-00342. Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 25 Nov 2022
- **Citation:** TCN-2022-NCLT-00342
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/subi-chemicals-private-limited-cp-ib-338-nclt-ahm-2020-41527090

## Summary

### Background

Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Subi Chemicals Private Limited, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application was based on Subi Chemicals' role as a corporate guarantor for credit facilities extended to Sarthak Creation Private Limited, which defaulted on its loan repayments. The applicant claimed that Subi Chemicals Private Limited is in default of Rs. 122,57,11,577 as of 29.02.2020. The corporate debtor argued that the application was barred by limitation and that the claim did not fall within the definition of financial debt.

## Facts

Bank of Baroda extended credit facilities to M/s. Sarthak Creation Private Limited, with Subi Chemicals Private Limited acting as a corporate guarantor. Sarthak Creation Private Limited defaulted on its loan repayments, leading to its account being classified as a Non-Performing Asset (NPA) on 11.12.2013. Bank of Baroda issued a notice under Section 13(2) of the SARFAESI Act, 2002, on 19.11.2015, demanding payment of Rs. 65,71,89,119.32 from Sarthak Creation Private Limited and Subi Chemicals Private Limited. The bank also issued a legal notice on 27.01.2016. Subi Chemicals Private Limited, in its reply dated 11.01.2016, objected to the demand notice. Sarthak Creation Private Limited submitted an application under Section 10 of the IBC, 2016, which was admitted on

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## Issues and analysis

### Issue 1: Whether the alleged claim falls within …

**Ratio:** The term "Financial Debt" under Section 5 (8) of the Insolvency and Bankruptcy

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**Reasoning:** The NCLT observed that the corporate debtor had provided corporate guarantees for the

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**Interpretation:** The NCLT interpreted the corporate guarantee as a financial debt within the

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**Application:** The NCLT applied the ratio to the facts of the case, finding that the corporate

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## Parties

- **Judges:** DEEPTI M…; Ajai Das Me…
- **Appellants:** Bank of B…
- **Respondents:** Subi Chemicals…
- **Advocates:** Sudhir…; Virendrasin…; +1 more

## Timeline

- **2008-01-01 — Credit Facilities…**: Credit facilities were initially sanctioned…
- **2010-06-28 — Corporate Guarantee…**: Corporate guarantee executed by…

## 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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