# In the matter of Bank of Baroda Vs. P Machindhar Reddy, CPIB/226/2021

> NCLT judgment dated 2023-02-06. Citation: TCN-2023-NCLT-04772. The case involves a petition filed by Bank of Baroda under Section 95 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 6 Feb 2023
- **Citation:** TCN-2023-NCLT-04772
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-baroda-vs-p-machindhar-reddy-cpib2262021-75531266

## Summary

### Background

The case involves a petition filed by Bank of Baroda under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking initiation of Insolvency Resolution Process against R. Srikanth Reddy, the personal guarantor of VNR Infrastructure Limited. Bank of Baroda had sanctioned working capital and term loans to VNR Infrastructure Limited, and R. Srikanth Reddy executed a Deed of Personal Guarantee in favor of the bank. VNR Infrastructure Limited defaulted on the loans, leading to its accounts being classified as Non-Performing Assets (NPA). Recovery proceedings were initiated before

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## Facts

Bank of Baroda sanctioned working capital facilities of Rs.56,00,00,000/- under a Consortium of Bankers led by State Bank of India (total limit for Consortium of Banks is Rs.720 crores) to VNR Infrastructure Limited. Bank of Baroda also sanctioned two term loans of Rs.19 crores to VNR Infrastructure Limited. R. Srikanth Reddy, along with others, executed a Deed of Personal Guarantee dated 30.01.2014 in favor of Consortium of Bankers, guaranteeing payment of Rs.720 crores. VNR Infrastructure Limited failed to adhere to the sanction terms, and its accounts were declared as Non-Performing Asset (NPA) on 29.07.2015. Bank of Baroda filed recovery proceedings before the Debt Recovery Tribunal (DRT), Hyderabad. The DRT, Hyderabad granted a recovery certificate vide its order

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## Issues and analysis

### Issue 1: Whether insolvency process can be ordered against respondent no.1/ Personal Guarantor under section …

**Ratio:** Section 95 of the Insolvency and Bankruptcy Code, 2016 allows for the initiation of

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**Reasoning:** The Tribunal considered the submissions made by the Financial Creditor, the contentions

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**Interpretation:** Section 95 of the IBC allows a financial creditor to initiate insolvency

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**Application:** The Tribunal found that it was a fit case to order CIRP against the personal

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## Parties

- **Judges:** TELAPROLU…; SH. CHARAN…
- **Appellants:** Bank of B…
- **Respondents:** V.N.R.Infrastructu…; R. Srikanth…
- **Advocates:** Mr.V.V.S.…; K. Sril…

## Timeline

- **2014-01-30 — Deed of Personal…**: R. Srikanth Reddy executed a Deed of Personal Guarantee in favor of Consortium of…
- **2015-07-29 — Accounts Classified as…**: VNR Infrastructure Limited's accounts were…

## 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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