Pravir Krishak Vs Bank of Baroda (NCLAT Delhi)
The appeal before the National Company Law Appellate Tribunal (NCLAT), Delhi, arose from an order of the Adjudicating Authority (NCLT, Indore Bench) admitting a Section 7 application under the Insolvency and Bankruptcy Code, 2016 (IBC) against a Corporate Guarantor and initiating Corporate Insolvency Resolution Process (CIRP). The appeal was filed by the suspended director of the Corporate Guarantor.
The primary issue for consideration was whether the Section 7 application was maintainable in view of the statutory threshold of ₹1 crore prescribed under Section 4 of the IBC. The Appellant contended that although two corporate guarantees of ₹75 lakhs and ₹95 lakhs were executed, the Section 7 application was filed only in respect of the ₹75 lakh guarantee. It was argued that the Guarantee Deed expressly capped the liability of the Corporate Guarantor at ₹75 lakhs in aggregate, inclusive of principal, interest, and charges. Therefore, the default could not exceed ₹75 lakhs, and the statutory threshold of ₹1 crore was not met.
The Respondent argued that the claim amount of ₹1.37 crore included principal, interest, and charges, and therefore crossed the threshold. It was contended that the guarantee covered the principal sum of ₹75 lakhs and, additionally, interest and other charges, thereby exceeding ₹1 crore.
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