# In the matter of Bank of Maharashtra vs. Sunil Kumar Prabhakaran Menon

> NCLT judgment dated 2024-10-21. Citation: TCN-2024-NCLT-00384. The Bank of Maharashtra filed a company petition under Section 95 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 21 Oct 2024
- **Citation:** TCN-2024-NCLT-00384
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-sunil-kumar-prabhakaran-menon-31c5a315

## Summary

### Background

The Bank of Maharashtra filed a company petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, to initiate the Insolvency Resolution Process against Mr. Sunil Kumar Prabhakaran Menon, the personal guarantor for a loan facility extended to M/s. Narayana Farm Produce Pvt. Ltd. The Corporate Debtor had availed a Term Loan of Rs. 70 crores and a Cash Credit facility of Rs. 5 crores from the Applicant Bank. The bank sanctioned these facilities on 04.10.2010. The Corporate Debtor executed Demand Promissory Notes on 01.11.2010. The Personal Guarantor executed a Deed of Guarantee in favor of the Applicant Bank on 01.11.2010. The Guarantors also created an equitable mortgage on 30.08.2011 to secure the loan facilities.

## Facts

The Bank of Maharashtra extended loan facilities to M/s. Narayana Farm Produce Pvt. Ltd., with Mr. Sunil Kumar Prabhakaran Menon acting as the personal guarantor. The loan included a Term Loan of Rs. 70 crores and a Cash Credit facility of Rs. 5 crores, sanctioned on 04.10.2010. The Corporate Debtor executed Demand Promissory Notes on 01.11.2010, and the Personal Guarantor executed a Deed of Guarantee on 01.11.2010. The Guarantors created an equitable mortgage on 30.08.2011 to secure the loan. The Corporate Debtor defaulted on the loan, leading the Applicant Bank to issue a notice under Section 13(2) of the Securitization & Reconstruction of Financial Assets and Enforcement of Security Act, 2002, on 20.08.2013, followed by a legal notice on 19.09.2013. A Demand

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## Issues and analysis

### Issue 1: Whether the petition for initiating insolvency resolution process against the Personal Guarantor to …

**Ratio:** The Supreme Court in Dilip B Jiwrajka Vs. Union of India & Ors. held that no judicial

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**Reasoning:** The NCLT observed that the copy of the petition had been served on the Personal Guarantor

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**Interpretation:** The Supreme Court's ruling clarifies that the initial stages of the insolvency

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**Application:** Based on the Supreme Court's ruling and the fact that the petition had been

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## Parties

- **Judges:** Charanjeet Singh…; Smt Lakshmi…
- **Appellants:** Bank of Maharashtr…
- **Respondents:** Narayana Farm…; Sunil Kumar…
- **Advocates:** Deepali J…; Adv Raina…; +2 more

## Timeline

- **2010-10-04 — Sanction of Loan…**: The Applicant Bank sanctioned the Term Loan and Cash Credit facility to the Corporate…
- **2010-11-01 — Execution of D…**: The Corporate Debtor executed Demand Promissory Notes, and the 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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