# 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-02887. The case involves a petition filed by Bank of Maharashtra against Shri Donkena Purna Sri, the…

- **Court:** NCLT
- **Order date:** 16 Jun 2023
- **Citation:** TCN-2023-NCLT-02887
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-donkena-purna-sri-cp-ceecf19e

## Summary

### Background

The case involves a petition filed by Bank of Maharashtra against Shri 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 Shri Donkena Purna Sri. The corporate debtor's account was declared

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## Facts

Bank of Maharashtra extended financial facilities to M/s. Maven Life Sciences Private Limited, the Corporate Debtor, including cash credit, bank guarantee, and letter of credit facilities. Shri Donkena Purna Sri acted as the personal guarantor for these facilities, executing a Deed of Guarantee on 16.07.2012. The corporate debtor defaulted on its repayment obligations, leading to its loan account being classified as a Non-Performing Asset (NPA) on 28.01.2013. The total outstanding amount, including interest, was Rs. 15,61,37,642.33 as of 23.08.2022. The bank issued a demand notice to the personal guarantor on 15.06.2022, requesting him to honor the guarantee. The guarantor failed to comply. The bank then filed a petition under Section 95 of the IBC, seeking initiation

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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 an

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**Reasoning:** The Tribunal considered the financial creditor's submissions, the Resolution

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**Interpretation:** Section 100 is interpreted to mean that if a personal guarantor fails to honor

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**Application:** In this case, the Corporate Debtor defaulted, the Personal Guarantor failed to

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** Maven Life…; Donkena Pur…

## Timeline

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