# In the matter of Tirupati Balaji Enterprises Pvt. Ltd.

> NCLT judgment dated 2023-10-31. Citation: TCN-2023-NCLT-00937. Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 31 Oct 2023
- **Citation:** TCN-2023-NCLT-00937
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/tirupati-balaji-enterprises-pvt-ltd-a3751335

## Summary

### Background

Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/S Tirupati Balaji Enterprises Pvt. Ltd., the Corporate Guarantor, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) due to default in repayment of outstanding amounts. The Corporate Debtor had availed a loan facility of Rs. 10,00,00,000/- from the Financial Creditor, with the Corporate Guarantor providing a guarantee and mortgaging its property. The loan account was classified as a Non-Performing Asset (NPA) on 30.09.2016, and a recall notice was issued on 01.10.2016. The total outstanding amount as of 31.03.2019 was Rs. 14,42,07,115/-. The Respondent argued that the Applicant Bank had also filed a Section 7 application against the

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## Facts

Punjab National Bank (PNB) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against M/S Tirupati Balaji Enterprises Pvt. Ltd., acting as a Corporate Guarantor. The application sought to initiate the Corporate Insolvency Resolution Process (CIRP) due to a default in loan repayment. The Corporate Debtor, M/s Guman Furnitures and Services Private Limited, had availed a loan facility of Rs. 10,00,00,000 from PNB, with Tirupati Balaji Enterprises providing a guarantee and mortgaging its property. The Corporate Debtor's account was classified as a Non-Performing Asset (NPA) on 30.09.2016, leading PNB to issue a recall notice on 01.10.2016. As of 31.03.2019, the total outstanding amount was Rs. 14,42,07,115. PNB had also initiated CIRP against

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating …

**Ratio:** The legal principle applied is that CIRP can be initiated against both the Principal

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**Reasoning:** The court reasoned that CIRP proceedings are not recovery proceedings and that the

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**Interpretation:** The interpretation is that the Insolvency and Bankruptcy Code allows for

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**Application:** In this specific case, the court applied the ratio and reasoning to the facts

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## Parties

- **Judges:** Deep Chandr…; RAJEEV ME…
- **Appellants:** Punjab National…
- **Respondents:** M/s Tirupati…
- **Advocates:** Amol…; Vikas…; +1 more

## Timeline

- **2011-12-01 — Incorporation of…**: The Corporate Guarantor, M/s Tirupati Balaji Enterprises, was incorporated as a Private…
- **2016-09-30 — Loan Account Classified…**: The loan account of the Corporate Debtor was…

## 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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