# In the matter of Bank of Maharashtra Vs. NNBV Venkateswara Rao, CP(IB)/183/95/HDB/2022

> NCLT judgment dated 2023-04-28. Citation: TCN-2023-NCLT-03574. The Financial Creditor, Bank of Maharashtra, filed a petition under Section 95 of the…

- **Court:** NCLT
- **Order date:** 28 Apr 2023
- **Citation:** TCN-2023-NCLT-03574
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-nnbv-venkateswara-rao-cp-dbb1b06b

## Summary

### Background

The Financial Creditor, Bank of Maharashtra, filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 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, seeking initiation of the Insolvency Resolution Process against NNBV Venkateshwara Rao, the Personal Guarantor of M/s. SVSVS Projects Private Limited (Corporate Debtor). The Petitioner Bank had sanctioned working capital facilities to the Corporate Debtor, which the Corporate Debtor failed to honor. The loan account of the Corporate Debtor was declared NPA on 27.12.2018. The Personal Guarantor had executed a Deed of Guarantee on 25.03.2014 to secure the financial

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## Facts

The Bank of Maharashtra sanctioned working capital facilities to M/s. SVSVS Projects Private Limited, the Corporate Debtor. These facilities included a Cash Credit facility of Rs.2.50 crores and bank guarantee facilities aggregating to Rs.48 crores. The Corporate Debtor failed to meet its repayment obligations, resulting in a total repayment default of Rs.48,02,97,568.69 as of 17.05.2022. The loan account was declared NPA on 27.12.2018. NNBV Venkateshwara Rao, the Personal Guarantor, executed a Deed of Guarantee on 25.03.2014 to secure the financial assistance provided to the Corporate Debtor. The bank issued a Form B demand notice dated 31.07.2021 to the personal guarantor for the outstanding amount, but the guarantor failed to pay. The bank attached sanction letters

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## Issues and analysis

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

**Ratio:** The approval of a resolution plan for the corporate debtor does not ipso facto discharge

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**Reasoning:** The Adjudicating Authority considered the report of the Resolution Professional, which

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

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**Application:** The Personal Guarantor failed to repay the amount due despite the demand notice

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** M/s. SVSVS…; Shri. NNBV…
- **Advocates:** Aishwarya…; Mirza M…

## Timeline

- **2014-03-24 — Sanction Lett…**: Date of the Sanction Letter pursuant to…
- **2014-03-25 — Deed of Guarantee…**: Respondent No.1 executed…

## 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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