# In the matter of Volkswagen Finance Pvt Ltd Vs. Pavan Kapoor, CP (IB) No. 25(ND)/2021

> NCLT judgment dated 2021-02-03. Citation: TCN-2021-NCLT-03151. The case involves an application filed by Volkswagen Finance Private Limited (the Creditor)…

- **Court:** NCLT
- **Order date:** 3 Feb 2021
- **Citation:** TCN-2021-NCLT-03151
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/volkswagen-finance-pvt-ltd-vs-pavan-kapoor-cp-149b4bfb

## Summary

### Background

The case involves an application filed by Volkswagen Finance Private Limited (the Creditor) under Section 95(1) of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 7(2) of the IB (Application to Adjudicating Authority for IRP for Personal Guarantors to CD) Rules, 2019, to initiate the Insolvency Resolution Process against Smt. Pavan Kapoor, the Personal Guarantor/Debtor, for a debt owed by Sterling Vehicle and General Sales Private Limited (Corporate Debtor). The creditor had disbursed loans to the corporate debtor, and the personal guarantor had provided a guarantee for the repayment of these loans. The corporate debtor underwent Corporate Insolvency Resolution Process (CIRP) and was subsequently liquidated.

## Facts

Volkswagen Finance Private Limited, a non-banking financial company, filed an application under Section 95(1) of the IBC, 2016, against Smt. Pavan Kapoor, a personal guarantor, for initiating the Insolvency Resolution Process. The creditor had extended credit facilities to Sterling Vehicle and General Sales Private Limited (Corporate Debtor), with Smt. Pavan Kapoor acting as the guarantor. The creditor disbursed Rs. 16,60,40,593.08 to the Corporate Debtor under various facility agreements. The Corporate Debtor defaulted on payments, with the amount of default being Rs. 26,51,02,154.61 as of 31.05.2019 & 15.07.2020. The Corporate Insolvency Resolution Process (CIRP) had been initiated against the Corporate Debtor on 26.02.2019, and the Corporate Debtor was

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## Issues and analysis

### Issue 1: Whether the application filed by the creditor under Section 95(1) of the IBC, 2016, is maintainable …

**Ratio:** Section 95(1) of the IBC, 2016, allows a creditor to file an application for initiating

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**Reasoning:** The court considered the factual matrix of the case, including the disbursement of loans

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

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**Application:** In this case, the creditor, Volkswagen Finance Private Limited, filed the

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## Parties

- **Judges:** CH. MOHD SHARIEF…; Narender Kumar…
- **Appellants:** Volkswagen…
- **Respondents:** Sterling Vehicle…; Sterling Vehicles…; +1 more

## Timeline

- **2012-03-23 — Sanction Lett…**: Applicant/Creditor issued a sanction letter with reference to the application made by the…
- **2019-02-26 — CIRP Init…**: Corporate Insolvency Resolution Process was initiated against the Corporate Debtor under…

## 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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