# In the matter of Bank of Maharashtra Vs. Nukala Savithri & Ors.

> NCLT judgment dated 2023-04-28. Citation: TCN-2023-NCLT-03572. The Bank of Maharashtra filed a petition under Section 95 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 28 Apr 2023
- **Citation:** TCN-2023-NCLT-03572
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-nukala-savithri-ors-1394af04

## Summary

### Background

The Bank of Maharashtra filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Insolvency Resolution Process against Smt. Nukala Savithri, the personal guarantor of SV SVS Projects Private Limited, due to the corporate debtor's failure to repay loans. The financial creditor had sanctioned working capital facilities to the corporate debtor, which defaulted on its obligations. A demand notice was issued to the personal guarantor, but the outstanding amount remained unpaid. The Corporate Debtor is already undergoing CIRP proceedings.

## Facts

The Bank of Maharashtra sanctioned working capital facilities to SV SVS Projects Private Limited, amounting to Rs. 50.50 Crores. The corporate debtor defaulted on repayments, with a principal amount of Rs. 32,30,71,217.76/- and an interest amount of Rs. 15,72,26,350.93/- outstanding as of 17.05.2022. Smt. Nukala Savithri provided a personal guarantee for the financial assistance granted to the corporate debtor. The financial creditor issued a demand notice to the personal guarantor on 31.07.2021, but the payment was not made. The corporate debtor is already undergoing CIRP proceedings. The personal guarantor claimed that the guarantee was revoked due to revised credit facilities and that a settlement amount had been paid. The Resolution Professional recommended the

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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 court relied on the principle established by the Supreme Court in Lalit Kumar Jain Vs

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**Interpretation:** This principle clarifies that a personal guarantee is an independent contract,

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**Application:** In this case, the personal guarantor, Smt. Nukala Savithri, is liable for the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** SV SVS Projects…; Nukala Sa…
- **Advocates:** Aishwarya…; Mirza Moinullah…

## Timeline

- **2014-03-24 — Sanction of Working…**: Bank of Maharastra sanctioned a working capital facility consisting of Cash Credit…
- **2016-04-09 — Revision of Credit…**: The credit facilities were revised…

## 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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