# In the matter of Bank of Maharashtra vs. Veeramachineni Ramamohana Rao

> NCLT judgment dated 2023-03-13. Citation: TCN-2023-NCLT-04268. The Bank of Maharashtra filed a Company Petition under Section 95 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 13 Mar 2023
- **Citation:** TCN-2023-NCLT-04268
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-veeramachineni-ramamohana-rao-5a98354f

## Summary

### Background

The Bank of Maharashtra filed a Company 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 Debtors) Rules, 2019, seeking initiation of the Insolvency Resolution Process against Shri. Veeramachineni Ramamohana Rao, the Personal Guarantor of SVSVS Projects Private Limited. The bank claimed that the personal guarantor executed a Deed of Guarantee to secure financial assistance to the Corporate Debtor. The Corporate Debtor defaulted, leading to CIRP proceedings initiated on 26.04.2021. The bank issued a demand notice on 31.07.2021, which the guarantor failed to comply with.

## Facts

The Bank of Maharashtra filed a petition against Shri. Veeramachineni Ramamohana Rao, the personal guarantor of SVSVS Projects Private Limited, under Section 95 of the Insolvency and Bankruptcy Code, 2016. The guarantor had executed a Deed of Guarantee on 25.03.2014 to secure financial assistance provided by the bank to the Corporate Debtor. The Corporate Debtor defaulted, leading to CIRP proceedings initiated on 26.04.2021. The outstanding debt as of 27.12.2018 was Rs. 48,02,97,568.69. The bank issued a demand notice on 31.07.2021, which the guarantor failed to repay. The guarantor claimed the guarantee was revoked due to non-execution of further agreements for revised terms, but the bank presented a revival letter dated 15.03.2017 where the guarantor acknowledged and

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## Issues and analysis

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

**Ratio:** The legal principle applied is that a personal guarantee is a binding contract, and the

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**Reasoning:** The court reasoned that the Personal Guarantor's plea of revocation was unsustainable

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**Interpretation:** The interpretation of Section 100 of the IBC is that if a personal guarantor

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**Application:** The court applied the ratio and reasoning to the facts by noting that the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** SVSVS Projects…; Shri. Veeramachine…
- **Advocates:** Aishwarya…; Mirza Moinulla…; +1 more

## Timeline

- **2014-03-25 — Deed of Guarantee…**: The Personal Guarantor executed a Deed of Guarantee to secure financial assistance…
- **2021-04-26 — CIRP Initiated Against…**: CIRP proceedings were initiated against…

## 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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