# In the matter of Shrinathji Spintex Pvt. Ltd. vs. Shantilal Parbatbhai Lakkad & Ors.

> NCLAT judgment dated 2025-05-13. Citation: TCN-2025-NCLAT-00043. The case involves appeals against orders passed by the National Company Law Tribunal (NCLT),…

- **Court:** NCLAT
- **Order date:** 13 May 2025
- **Citation:** TCN-2025-NCLAT-00043
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/shrinathji-spintex-pvt-ltd-vs-shantilal-parbatbhai-lakkad-ors-ff39bf21

## Summary

### Background

The case involves appeals against orders passed by the National Company Law Tribunal (NCLT), Ahmedabad, regarding the initiation of insolvency proceedings against personal guarantors of a corporate debtor, M/s Sunrise Ginning Private Limited. Shrinathji Spintex Private Limited, the appellant, filed an application under Section 95 of the Insolvency and Bankruptcy Code (IBC) to initiate insolvency resolution proceedings against Mr. Shantilal Parbatbhai Lakkad, a personal guarantor. The NCLT dismissed the application, citing the absence of a written contract of guarantee. The appellant argued that a consent decree signed by the respondent constituted a valid guarantee. The appeals also challenge the NCLT's imposition of penalties and adverse remarks against the Resolution

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## Facts

Shrinathji Spintex Private Limited (Appellant) supplied cotton bales worth Rs.3,44,98,716/- to M/s Sunrise Ginning Private Limited (Corporate Debtor) between April and July 2015 under an oral agreement. The Corporate Debtor failed to pay the outstanding dues. On 02.01.2020, the Appellant filed Special Civil Suit No. 02 of 2020 before the Principal Civil Judge, Rajkot, seeking recovery of the dues and an injunction to restrain Respondent No. 1 (Shantilal Parbatbhai Lakkad) and other guarantors from disposing of their assets. A consent decree was passed on 05.03.2020, signed by Respondent No. 1, obligating the Corporate Debtor and Respondent No. 1 to pay INR 5,77,85,361, including interest, to the Appellant. The consent decree remained unfulfilled. On 10.11.2022, the

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## Issues and analysis

### Issue 1: Whether the Consent Decree dated 05.03.2020 constitutes a valid contract of guarantee under Section …

**Ratio:** Section 126 of the Indian Contract Act defines a contract of guarantee as an agreement

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**Reasoning:** The court found that there was no independent documentary evidence establishing that

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**Interpretation:** A Consent Decree is merely a formal acknowledgment of an agreement between

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**Application:** In the present case, there is no written contract of guarantee qua the CD and

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…; +1 more
- **Appellants:** Shrinathji…
- **Respondents:** M/s Sunrise…; Shantilal…

## Timeline

- **2015-04-01 — Supply of Cott…**: Between April and July 2015, the appellant supplied cotton bales worth Rs.3,44,98,716/-…
- **2020-01-02 — Filing of Special Civil…**: The appellant filed Special Civil Suit No. 02 of 2020 before the Principal Civil Judge,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61(1) — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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