# In the matter of Bank of Maharashtra Vs. Donkena Purna Sri, CP (IB)/47/95/HDB/2023

> NCLT judgment dated 2023-06-16. Citation: TCN-2023-NCLT-02912. The case involves a petition filed by Bank of Maharashtra against Mr. Donkena Purna Sri, the…

- **Court:** NCLT
- **Order date:** 16 Jun 2023
- **Citation:** TCN-2023-NCLT-02912
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-donkena-purna-sri-cp-5a692bb8

## Summary

### Background

The case involves a petition filed by Bank of Maharashtra against Mr. Donkena Purna Sri, the personal guarantor of M/s. Maven Life Sciences Private Limited (Corporate Debtor), 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 Debtor) Rules, 2019. The bank sought initiation of the Insolvency Resolution Process (IRP) against the personal guarantor due to the corporate debtor's failure to meet its financial obligations. The bank had sanctioned credit facilities to the corporate debtor, which were secured by a guarantee from Mr. Donkena Purna Sri. The corporate debtor's account was declared NPA

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## Facts

Bank of Maharashtra extended credit facilities to M/s. Maven Life Sciences Private Limited, with Mr. Donkena Purna Sri acting as the personal guarantor. A deed of guarantee was executed on 16.07.2012 to secure the financial assistance. The corporate debtor's account was declared a Non-Performing Asset (NPA) on 28.01.2013 due to its failure to honor its obligations. The total outstanding amount was Rs. 15,61,37,642.33, including an interest amount of Rs. 11,03,68,822.33 calculated until 23.08.2022. The bank issued a Form B demand notice dated 15.06.2022 to the personal guarantor, requesting him to honor the terms of the agreement. The Hon'ble DRT had certified that the Financial Creditor is entitled of the amounts due against the Loan Facilities vide its Recovery

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## Issues and analysis

### Issue 1: Whether an Insolvency Resolution Process can be ordered against the Personal Guarantor under …

**Ratio:** Section 100 of the Insolvency and Bankruptcy Code, 2016, allows for the initiation of the

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**Reasoning:** The Tribunal considered the fact that the Personal Guarantor did not contest the matter

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**Interpretation:** Section 100 provides a mechanism for creditors to recover debts from personal

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**Application:** In this case, the Corporate Debtor defaulted on its debt, and the Personal

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** M/s.Maven Life…; M/s. Maven Life…; +1 more

## Timeline

- **2012-07-16 — Deed of Guarantee…**: Respondent No.1, Personal Guarantor executed a Deed of Guarantee to secure the financial…
- **2013-01-28 — Account Decla…**: The loan account of Respondent No.2…

## 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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