# In the matter of State Bank of India Vs.  Sunil Sharma, CP (IB) No. 872 (ND)/2020

> NCLT judgment dated 2021-10-06. Citation: TCN-2021-NCLT-00835. State Bank of India, the Financial Creditor, filed an application under Section 95(1) of the…

- **Court:** NCLT
- **Order date:** 6 Oct 2021
- **Citation:** TCN-2021-NCLT-00835
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/state-bank-of-india-vs-sunil-sharma-cp-805fd3fc

## Summary

### Background

State Bank of India, the Financial Creditor, filed an application under Section 95(1) of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtor) Rules, 2019, to initiate the Insolvency Resolution Process against Mr. Sunil Sharma, the Personal Guarantor, who was the Ex-Managing Director of Benlon India Limited, the Corporate Debtor. The application pertains to the personal guarantee provided by Mr. Sharma for the credit facilities availed by Benlon India Limited.

## Facts

State Bank of India (SBI), the Financial Creditor, filed an application under Section 95(1) of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate the Insolvency Resolution Process against Mr. Sunil Sharma, the Personal Guarantor, who was the Ex-Managing Director of Benlon India Limited, the Corporate Debtor. The application was filed due to the personal guarantee provided by Mr. Sharma for the credit facilities availed by Benlon India Limited. The Corporate Debtor had availed Term Loans and Working Capital Facilities (WCF) from the Applicant Bank. The WCF were secured by the equitable mortgage of the properties of the Corporate Debtor and of the personal guarantor Mr. Balbir Sharma. The Credit facilities were also secured by the personal guarantees of Mr.

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## Issues and analysis

### Issue 1: Whether the application filed by the State Bank of India under Section 95(1) of the IBC, 2016, to …

**Ratio:** Section 95(1) of the IBC, 2016, allows a creditor to initiate insolvency resolution

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**Reasoning:** The court observed that the Personal Guarantor had committed, prima facie, default in

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**Interpretation:** Section 95(1) provides a mechanism for creditors to recover their dues from

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**Application:** The court found that the Personal Guarantor had defaulted on the loan

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## Parties

- **Judges:** Sh. Abni Ranjan…; SH. L. N.…
- **Appellants:** State Bank of…
- **Respondents:** Benlon India…; Sunil S…

## Timeline

- **2020-01-27 — Demand N…**: Applicant Bank served the Statutory Demand Notice on the Personal Guarantor Mr. Sunil…
- **2020-03-07 — Application D…**: Applicant Bank dispatched a copy of the present…

## 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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