# In the matter of Bank of Maharashtra vs. Gali Naranjan

> NCLT judgment dated 2024-11-29. Citation: TCN-2024-NCLT-00125. The Bank of Maharashtra, acting as the financial creditor, initiated proceedings against Mr.…

- **Court:** NCLT
- **Order date:** 29 Nov 2024
- **Citation:** TCN-2024-NCLT-00125
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-gali-naranjan-ad827e9d

## Summary

### Background

The Bank of Maharashtra, acting as the financial creditor, initiated proceedings against Mr. Gali Niranjan, the personal guarantor to M/s Rex Contractors & Traders Pvt Ltd (the corporate debtor), under Section 123 read with 60(2) of the Insolvency and Bankruptcy Code, 2016, and Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtor) Rules, 2019. The corporate debtor had availed credit facilities of Rs. 1.80 Crores from the bank, for which Mr. Gali Niranjan provided a personal guarantee. The corporate debtor defaulted, leading to its account being declared NPA on 20.01.2014. The financial creditor claimed an outstanding amount of Rs. 8,21,44,938/-. The personal guarantor

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## Facts

Bank of Maharashtra extended credit facilities amounting to Rs. 1.80 Crores to M/s Rex Contractors & Traders Pvt Ltd, the corporate debtor. Mr. Gali Niranjan provided a personal guarantee for these facilities. The corporate debtor defaulted on its obligations, leading to the account being classified as a Non-Performing Asset (NPA) on 20.01.2014. The outstanding amount payable to the financial creditor was Rs. 8,21,44,938/- as of 20.09.2024. The creditor issued a demand notice to the personal guarantor, who failed to comply. Consequently, CP(IB) No. 43/95/HDB/2023 was filed under Section 95 of the Insolvency and Bankruptcy Code, 2016. The Tribunal admitted the case on 06.07.2023 and appointed Mr. Golla Ramakantha Rao as the Resolution Professional. The personal

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## Issues and analysis

### Issue 1: Whether the Applicant/Creditor is entitled to proceed against the Respondent/Guarantor for …

**Ratio:** Section 121 of the Insolvency and Bankruptcy Code, 2016, allows a creditor to apply for

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**Reasoning:** The Tribunal reasoned that a prior order had been passed under Section 121(1)(a) of the

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**Interpretation:** Section 121 and 123 of the IBC, 2016, are interpreted to mean that a creditor

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**Application:** In this case, the Tribunal applied the provisions of Section 121 and 123 to the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Maharashtr…
- **Respondents:** M/s Rex Contractor…; Gali Nir…

## Timeline

- **2012-11-02 — Sanction…**: Applicant sanctioned Rs.1.80 Crores in the form of Cash Credit facilities in favour of…
- **2012-11-06 — Deed of Gua…**: Personal guarantee…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 123 — Application by creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-123)

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