# 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-02987. 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-02987
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-baroda-vs-v-narayana-reddy-cp-d7ac31ec

## 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 the Insolvency Resolution Process (IR Process) against the Personal Guarantor. The FC had sanctioned a loan to the CD, for which the PG stood as a guarantor. The CD defaulted on the loan, leading to its classification as a Non-Performing Asset (NPA). Recovery proceedings were initiated before the DRT, and a recovery certificate was issued. The CD was admitted into CIRP. The FC then filed the current application to initiate IR Process against the PG.

## 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 Corporate Debtor defaulted, and the account was classified as NPA on 29.07.2015. The Financial Creditor initiated recovery proceedings before the DRT, Hyderabad, which decreed in their favor, and a Recovery Certificate was issued on 22.01.2020. The Corporate Debtor was admitted into CIRP on 10.02.2017. A demand notice was issued to the Personal Guarantor on 29.09.2020, but no reply was received. The Corporate Debtor's capital had substantially eroded, leading to a

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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 stood as

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**Interpretation:** The principle of coextensive liability means that the guarantor is liable to

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**Application:** Since the Corporate Debtor defaulted on the loan, the Personal Guarantor, being

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## Parties

- **Judges:** TELAPROLU…; Shri. Chara…
- **Appellants:** Bank of B…
- **Respondents:** V.N.R.Infrastructu…; V. Narayana…

## Timeline

- **2013-03-18 — Sanction…**: The Financial Creditor sanctioned a loan in favor of the Corporate Debtor for Rs.75.0…
- **2014-01-30 — Working Capital…**: The Consortium of Bankers entered into a Working Capital Consortium Agreement for…

## 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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