# In the matter of State Bank of India Vs. Kolli Venkata Raja Sekhar & GKC Projects Ltd. CP (IB) No. 253/95 of IBC/HDB/2020

> NCLT judgment dated 2021-11-11. Citation: TCN-2021-NCLT-00538. The State Bank of India filed a petition under Section 95 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 11 Nov 2021
- **Citation:** TCN-2021-NCLT-00538
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/state-bank-of-india-vs-kolli-venkata-raja-sekhar-gkc-projects-ltd-cp-78562291

## Summary

### Background

The State Bank of India filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Insolvency Resolution Process against Sri Kolli Venkata Raja Sekhar, the Personal Guarantor of GKC Projects Limited. The bank had sanctioned credit facilities to GKC Projects Limited in 2013. The corporate debtor defaulted on its obligations, leading to the bank classifying the account as NPA. The financial creditor initiated recovery proceedings under the SARFAESI Act and also filed a company petition under Section 7 of the Code, which was later rejected. A demand notice was issued to the personal guarantor on 04.04.2020.

## Facts

State Bank of India (Financial Creditor) filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, against Sri Kolli Venkata Raja Sekhar (Personal Guarantor) of GKC Projects Limited. The bank had sanctioned credit facilities to GKC Projects Limited in 2013, including cash credit, term loans, bank guarantees, and debentures, totaling Rs. 773,20,51,119.34. The Corporate Debtor defaulted on the terms of sanction letters and loan documents for cash credit account on 24.07.2018 and for Term Loan Account on 31.10.2018. The accounts of the Corporate Debtor were classified as NPA on 21.10.2018. The Financial Creditor exercised its rights under the SARFAESI Act, 2002, and filed OA No. 326 of 2019 before the Debt Recovery Tribunal-1, Hyderabad on 22.04.2019.

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## Issues and analysis

### Issue 1: Whether Insolvency Resolution Process can be ordered against the Personal Guarantor Shri Kolli …

**Ratio:** When the debt and default are not in dispute, and the Personal Guarantor has conceded to

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**Reasoning:** The Tribunal noted that the Personal Guarantor had admitted the debt and that the

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**Interpretation:** This legal issue concerns the applicability of the Insolvency and Bankruptcy

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**Application:** In this case, the Personal Guarantor admitted the debt, and the Financial

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** State Bank of…
- **Respondents:** GKC Projec…; Kolli Venkata…

## Timeline

- **2013-01-01 — Credit Facilities…**: The Bank sanctioned credit facilities to the…
- **2018-07-24 — Default on Cash Credit…**: The Corporate Debtor committed defaults on the terms of sanction letters and loan…

## Legal provisions

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

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