# Tamil Nadu Mercantile Bank Limited & Anr. vs. Ms. E. Santhanalakshmi & Anr.

> NCLAT judgment dated 2026-09-28. Citation: TCN-2026-NCLAT-00287. Four appeals were filed challenging a common order passed by the National Company Law…

- **Court:** NCLAT
- **Order date:** 28 Sept 2026
- **Citation:** TCN-2026-NCLAT-00287
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-chennai/tamil-nadu-mercantile-bank-limited-vs-e-santhanalakshmi-5q630

## Summary

### Background

Four appeals were filed challenging a common order passed by the National Company Law Tribunal (NCLT) in various interlocutory applications (IAs). The NCLT order allowed the liquidator to ratify an One-Time Settlement (OTS) transaction between Tamil Nadu Mercantile Bank (TMB) and Mr. S.V. Ramasamy, the personal guarantor, for the sale of assets of the Corporate Debtor (CD), M/s. Swastik Spinners (India) Private Limited. It rejected the prayer of Sri Sivajothi Spinning Mills Pvt Limited for the return of forfeited Earnest Money Deposit (EMD) and partially allowed the ex-liquidator Mr. S. Muthuraju's remuneration. Crucially, it directed TMB to remit the forfeited EMD amount back to the liquidator for distribution as per Section 53 of the I&B Code. The CD had entered

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## Facts

Four appeals were filed challenging a common order passed by the NCLT in IA Nos. 1838/2023, 167/2023, 1240/2023, 1421/2023, and 1735/2024 in IBA/288/2018.

The NCLT allowed the liquidator's prayer in IA/1838/2023 to ratify the OTS transaction dated 17.07.2021 between Tamil Nadu Mercantile Bank (TMB) and Mr. S.V. Ramasamy.

The NCLT permitted the liquidator to sell the assets of the Corporate Debtor (CD) to Mr. S.V. Ramasamy, the personal guarantor.

The NCLT rejected the prayer of Sri Sivajothi Spinning Mills Pvt Limited in IA/167/2023 and IA/1240/2023 for the return of forfeited EMD with interest.

The NCLT partially allowed the prayer of ex-liquidator Mr. S. Muthuraju in IA/1421/2023, ordering payment of ₹20 lakhs towards remuneration and expenses.

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## Issues and analysis

### Issue 1: Whether the settlement arrived between Mr. S.V. Ramasamy and TMB has any implication on the instant …

**Ratio:** A private settlement between a personal guarantor and a financial creditor, even if it

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**Reasoning:** The NCLT's order dated 12.05.2023 in MA No. 3/2022, which has attained finality, clearly

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**Interpretation:** The Insolvency and Bankruptcy Code (IBC) provides a structured framework for

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**Application:** The NCLAT affirmed that the settlement between Mr. S.V. Ramasamy and TMB, while

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## Parties

- **Judges:** Sharad Kumar…; Jatindranat…
- **Appellants:** Tamil Nadu…; S V Ram…; +1 more
- **Respondents:** M/s. Swastik…; E.Santhanal…; +1 more
- **Other parties:** Tamil Nadu…; TCP Lim…
- **Advocates:** Rajendran R…; S. Umamah…; +3 more

## Timeline

- **2018-03-22 — CIRP Commen…**: Corporate Debtor entered CIRP; Shri…
- **2018-08-01 — Operational Creditor…**: Operational creditor TCP Limited submitted their claim during the CIRP for ₹1.06 crore…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 53 — Distribution of assets](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-53)

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