# In the matter of Bank of Baroda Vs. V Narayana Reddy, CP (IB)/300/2022

> NCLT judgment dated 2023-06-12. Citation: TCN-2023-NCLT-02979. The case involves an application filed by Bank of Baroda, the Financial Creditor (FC), against…

- **Court:** NCLT
- **Order date:** 12 Jun 2023
- **Citation:** TCN-2023-NCLT-02979
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-baroda-vs-v-narayana-reddy-cp-6d4eb268

## Summary

### Background

The case involves an application filed by Bank of Baroda, the Financial Creditor (FC), against V. Narayana Reddy, the Personal Guarantor (PG), and VNR Infrastructure Limited, the Corporate Debtor (CD), seeking to initiate Insolvency Resolution Process (IR Process) against the Personal Guarantor. The FC had sanctioned a loan to the CD, for which the PG stood as guarantor. The CD defaulted, was classified as NPA, and admitted into CIRP. The FC then filed recovery proceedings before the DRT, obtaining a decree and recovery certificate. The application seeks to initiate the IR Process against the PG due to the CD's default.

## Facts

Bank of Baroda (Financial Creditor) sanctioned a loan to VNR Infrastructure Limited (Corporate Debtor), with V. Narayana Reddy (Personal Guarantor) acting as guarantor for Rs. 75.0 Crores. A working capital facility of Rs. 56.0 Crores was sanctioned. The loan was part of a Consortium Agreement led by SBI. The Consortium of Bankers, including Bank of Baroda, entered into a Working Capital Consortium Agreement dated 2014-01-30 for Rs. 720.0 Crores. The Personal Guarantor executed a Deed of Personal Guarantee on 2014-01-30, guaranteeing payment of Rs. 720.0 Crores. The Corporate Debtor defaulted, leading to its account being classified as NPA on 2015-07-29. A reference was made to BIFR, but BIFR was dissolved in 2016. The Financial Creditor filed recovery proceedings

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## Issues and analysis

### Issue 1: Whether the application to initiate Insolvency Resolution Process against the Personal Guarantor is …

**Ratio:** The liability of a guarantor is

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**Reasoning:** The Corporate Debtor failed to discharge the loan, and the Personal Guarantor had

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**Interpretation:** This principle means that the guarantor is liable to the same extent as the

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**Application:** Since the Corporate Debtor defaulted on the loan and was admitted into CIRP,

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## Parties

- **Judges:** TELAPROLU…; SH. CHARAN…
- **Appellants:** Bank of B…
- **Respondents:** V.N.R.Infrastructu…; VNR Infrastructure…; +1 more

## Timeline

- **2013-03-18 — Sanction…**: The FC sanctioned a loan in favour of Respondent No.2 for which, Respondent No.1 stood as…
- **2014-01-30 — Working Capital…**: The Consortium of Bankers lead by State Bank of India, including the FC herein, had…

## 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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