# In the matter of State Bank of India vs. Ashok Agarwal

> NCLT judgment dated 2025-01-30. Citation: TCN-2025-NCLT-01109. State Bank of India filed an application under Section 95(1) of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 30 Jan 2025
- **Citation:** TCN-2025-NCLT-01109
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chennai/state-bank-of-india-vs-ashok-agarwal-c89a5f39

## Summary

### Background

State Bank of India filed an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, against Ashok Agarwal, the personal guarantor of the corporate debtor, Ashok Magnetics Limited, due to default in repayment of a term loan facility.

## Facts

State Bank of India (SBI) sanctioned a term loan of Rs. 1.10 Crore to Ashok Magnetics Limited on 07.12.2007, secured by the aircraft and personal guarantee of Ashok Agarwal and Anita Agarwal.

The corporate debtor further approached the financial creditor seeking renewal cum enhancement of credit facilities and the financial creditor sanctioned the limits of Rs. 25.77 Crores vide letter dated 18.11.2009.

Ashok Agarwal, Anitha Agarwal, Ajay Agarwal and Ankit Agarwal executed continuing guarantee agreements on 19.11.2009 and 18.09.2012 for a sum of Rs. 25.0 Crores.

The corporate debtor's account was classified as NPA on 17.01.2015, with an outstanding liability of Rs. 60,09,76,978.61 as on 30.09.2020.

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## Issues and analysis

### Issue 1: Whether the application filed under Section 95 of the IBC against the personal guarantor is barred …

**Ratio:** The limitation period for initiating proceedings against a guarantor is typically three

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**Reasoning:** The respondent argued that the application was filed beyond three years from the date the

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**Interpretation:** The court interpreted the OTS letter as an acknowledgment of debt, which

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**Application:** The court applied the principle that an acknowledgment of debt by the principal

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## Parties

- **Judges:** SANJIV…; Venkataraman…
- **Appellants:** State Bank of…
- **Respondents:** Ashok Magnetics…; Ashok Ag…
- **Other parties:** Anitha Ag…; Ajay Ag…; +6 more
- **Advocates:** M.L. Ga…; Jayesh B…; +1 more

## Timeline

- **07.12.2007 — Term Loan San…**: State Bank of India sanctioned a term loan of…
- **18.11.2009 — Credit Facilities…**: Financial creditor sanctioned…

## 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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