# In the matter of Superior Industries Limited I.A. 604, 1552 & 1553-ND-2021 in Company Petition No. (IB) – 1032-(ND)-2018

> NCLT judgment dated 2023-03-23. Citation: TCN-2023-NCLT-04076. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 23 Mar 2023
- **Citation:** TCN-2023-NCLT-04076
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/superior-industries-limited-ia-604-1552-1553-nd-2021-in-company-petition-no-ib-1-b35b6b10

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by Punjab National Bank (PNB) (International) Limited against M/s Superior Industries Limited, the Corporate Debtor, for alleged default on a corporate guarantee. PNB provided loan facilities to Vishal Cruise Private Limited, the principal borrower, secured by corporate guarantees from Superior Industries. When Vishal Cruise defaulted, PNB initiated CIRP against Superior Industries as the corporate guarantor. The Corporate Debtor opposed the application, raising issues of limitation, validity of the guarantee under FEMA regulations, and the existence of a lien on fixed deposits with PNB.

## Facts

Punjab National Bank (PNB) (International) Limited, a company incorporated in London, extended loan facilities to Vishal Cruise Private Limited, a company registered in Mauritius, for the purchase of a luxury cruise ship. The loan was for €10,000,000, with a subsequent overdraft facility of €2,000,000. M/s Superior Industries Limited provided corporate guarantees dated 04.05.2012 and 28.01.2013 to secure these loan facilities. Vishal Cruise Private Limited defaulted on the loans, leading PNB to issue a demand notice on 05.12.2016 and a subsequent demand notice to Superior Industries on 20.12.2016, as the corporate guarantor, for Rs. 1,28,38,91,241. PNB filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) to initiate Corporate Insolvency

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## Issues and analysis

### Issue 1: Whether the application under Section 7 …

**Ratio:** The liability of the guarantor is coextensive with the principal borrower under Section

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**Reasoning:** The Tribunal noted that the petition was filed on 16.08.2018, and the date of first

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**Interpretation:** The legal principle is that acknowledgments of debt by the principal borrower

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**Application:** In this case, the acknowledgments by Vishal Cruise Private Limited, the

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## Parties

- **Judges:** SHRI. P.S.N.…; RAHUL BHA…
- **Appellants:** Punjab National…
- **Respondents:** M/SUPERIOR…
- **Advocates:** Mithilesh Kumar…; Krishnendu…; +4 more

## Timeline

- **2012-05-04 — Corporate Gu…**: Corporate Debtor provided corporate guarantee dated 04.05.2012 to secure the loan…
- **2013-01-28 — Corporate Gu…**: Corporate Debtor provided corporate guarantee dated 28.01.2013 to secure the loan…

## 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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