# In the matter of Bank of Maharashtra Vs. P Srinivas (Versatile Mobile Distributors Private Limited) , CP (IB)/369/95/HDB/2022

> NCLT judgment dated 2023-06-14. Citation: TCN-2023-NCLT-02957. The case involves a petition filed by the Bank of Maharashtra against Shri P. Srinivas, the…

- **Court:** NCLT
- **Order date:** 14 Jun 2023
- **Citation:** TCN-2023-NCLT-02957
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-p-srinivas-20e9662a

## Summary

### Background

The case involves a petition filed by the Bank of Maharashtra against Shri P. Srinivas, the personal guarantor of Versatile Mobile Distributors 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 a working capital facility to the corporate debtor, which included a cash credit facility and a bank guarantee limit. The corporate debtor defaulted

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## Facts

The Bank of Maharashtra sanctioned a working capital facility to Versatile Mobile Distributors Private Limited, consisting of a cash credit facility of Rs. 885 Lakhs and a bank guarantee limit of Rs. 550 Lakhs. The total repayments due from the corporate debtor amounted to Rs. 23,07,51,863.71, including a principal amount of Rs. 9,40,43,475.84 and interest of Rs. 13,67,08,387.87 (calculated until 23.08.2022). The corporate debtor failed to honor its obligations, leading to its loan account being declared as NPA on 31.12.2016. Shri P. Srinivas, the personal guarantor, executed a Deed of Guarantee on 20.08.2015 to secure the financial assistance. The Guarantee Deed stipulated that a certificate signed by an official of the Financial Creditor would be conclusive evidence

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## Issues and analysis

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

**Ratio:** The Insolvency and Bankruptcy Code, 2016, allows for the initiation of insolvency

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**Reasoning:** The Tribunal considered the RP's report, the financial creditor's submissions, and the

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**Interpretation:** Section 100 of the IBC, 2016, provides the legal basis for initiating

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**Application:** In this case, the personal guarantor, Shri P. Srinivas, failed to repay the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Maharashtr…
- **Respondents:** Versatile Mobile…; Shri. P Sr…

## Timeline

- **2015-08-17 — Sanction…**: Petitioner Bank issued Sanction letter for…
- **2015-08-20 — Deed of Gua…**: Personal Guarantor…

## 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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