# State Bank of India, Stressed Asset Management Branch Vs. Mahendra Kumar Jajodia Company Appeal (AT) Insolvency No. 60 of 2022

> NCLAT judgment dated 2022-01-27. Citation: TCN-2022-NCLAT-00660. The State Bank of India filed applications under Section 95(1) of the Insolvency and…

- **Court:** NCLAT
- **Order date:** 27 Jan 2022
- **Citation:** TCN-2022-NCLAT-00660
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/state-bank-of-india-stressed-asset-management-branch-vs-mahendra-kumar-jajodia-c-f4798837

## Summary

### Background

The State Bank of India filed applications under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the personal guarantors, Mahendra Kumar Jajodia and Bhanwar Lal Jajodia. The Adjudicating Authority rejected the applications as premature, citing that no CIRP or liquidation process was pending against the Corporate Debtor due to the approval of the Resolution Plan. The Adjudicating Authority relied on Section 60(2) of the Code, which requires a pending CIRP or liquidation process against the principal borrower/Corporate Debtor for initiating insolvency resolution against the guarantor. The appeals were filed against this order.

## Facts

The State Bank of India (SBI) filed applications under Section 95(1) of the Insolvency and Bankruptcy Code (IBC) against Mahendra Kumar Jajodia and Bhanwar Lal Jajodia, who are personal guarantors to a corporate debtor. The National Company Law Tribunal (NCLT), Kolkata Bench, rejected SBI's applications as premature, citing that no Corporate Insolvency Resolution Process (CIRP) or liquidation process was pending against the corporate debtor because a resolution plan had already been approved. The NCLT based its decision on Section 60(2) of the IBC, which states that an insolvency resolution process against a guarantor can only be initiated if a CIRP or liquidation process is pending against the principal borrower/corporate debtor. SBI appealed this decision, arguing

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority erred in rejecting the application under Section 95(1) of the …

**Ratio:** Section 60(1) of the Insolvency and Bankruptcy Code provides the Adjudicating Authority

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**Reasoning:** The NCLAT reasoned that the Adjudicating Authority erred in holding that the application

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**Interpretation:** Section 60(1) establishes the NCLT as the Adjudicating Authority for insolvency

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**Application:** In this case, the NCLAT applied the interpretation of Section 60 to the facts,

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…
- **Appellants:** State Bank of…
- **Respondents:** Mahendra Kumar…
- **Other parties:** 7th Edition…; Personal Gu…; +10 more

## Timeline

- **2021-10-05 — Order by Adjudicating…**: The Adjudicating Authority rejected the application filed by State Bank of India under…
- **2022-01-27 — Order by…**: The National Company Law Appellate Tribunal (NCLAT) set aside the order passed by the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 95(1) — Application by creditor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-95)

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