The National Company Law Tribunal (NCLT), Mumbai on 24 August held that a Corporate Debtor’s liability under a Corporate Guarantee does not end merely because the bank obtains a mortgage from the new owner of the mortgaged property.
A Bench comprising Judicial Member Vinay Goel and Technical Member Charanjeet Singh Gulati admitted Jammu and Kashmir Bank Ltd.‘s Section 7 insolvency petition against Essel Infraprojects Limited over a default of Rs. 87.43 crore arising from a Rs. 200 crore credit facility extended to Pan India Utilities Distribution Company Ltd. The Tribunal said:
“Merely because the Bank obtained a mortgage from the new owner of the property would not discharge the Corporate Debtor from its separate liability under…