# M. Suresh Kumar Reddy vs. Canara Bank & Ors. [Civil Appeal No. 7121 of 2022]

> SC judgment dated 2023-05-11. Citation: TCN-2023-SC-00072. The case involves a civil appeal against the admission of an application under Section 7 of the…

- **Court:** SC
- **Order date:** 11 May 2023
- **Citation:** TCN-2023-SC-00072
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/m-suresh-kumar-reddy-vs-canara-bank-ors-fb9179b8

## Summary

### Background

The case involves a civil appeal against the admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the National Company Law Tribunal (NCLT), Hyderabad, against Kranthi Edifice Pvt. Ltd., a Corporate Debtor. The appellant, M. Suresh Kumar Reddy, is a suspended Director of the Corporate Debtor. The respondent, Canara Bank, filed the application as a successor to Syndicate Bank, which had originally sanctioned credit facilities to the Corporate Debtor. The NCLT admitted the application, leading to a moratorium. The appellant's appeal against the NCLT order was dismissed by the National Company Law Appellate Tribunal (NCLAT).

## Facts

Syndicate Bank sanctioned credit facilities to Kranthi Edifice Pvt. Ltd. (Corporate Debtor), valid until February 28, 2017, including a Secured Overdraft Facility of Rs. 12 crores and a Bank Guarantee limit of Rs. 110 crores. As of November 30, 2019, the Corporate Debtor's liability under the Secured Overdraft Facility was Rs.74,52,87,564.93, and the liability towards outstanding Bank Guarantees was Rs.19,16,20,100. The Government of Telangana requested Syndicate Bank to extend the Bank Guarantees, but the bank did not. The Corporate Debtor also requested an extension. Canara Bank, as the successor to Syndicate Bank, filed an application under Section 7 of the IBC before the NCLT, Hyderabad. The NCLT admitted the application on June 27, 2022, and declared a moratorium.

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## Issues and analysis

### Issue 1: Whether the NCLT was justified in admitting the application under Section 7 of the Insolvency and …

**Ratio:** The legal principle applied is that once the adjudicating authority (NCLT) is satisfied

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**Reasoning:** The court reasoned that the failure of the bank to extend the bank guarantees, even if it

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**Interpretation:** Section 7 of the IBC is interpreted to mean that the adjudicating authority's

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**Application:** In this case, the Corporate Debtor committed a default due to non-payment of

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## Parties

- **Judges:** ABHAY S…; RAJESH B…
- **Appellants:** M. Suresh Kumar…
- **Respondents:** Kranthi Edifice…; Canara Bank…
- **Other parties:** 7th Edition…; Section…; +7 more

## Timeline

- **2016-04-02 — Sanction Lette…**: Syndicate Bank issued a letter of sanction for…
- **2017-02-28 — Validity of Credit…**: The credit facilities sanctioned to the…

## 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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