# In the matter of Bank of Maharashtra vs. Veeramachineni Sailaja & Ors.

> NCLT judgment dated 2023-03-13. Citation: TCN-2023-NCLT-04262. 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-04262
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharashtra-vs-veeramachineni-sailaja-ors-9899e15f

## 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 Smt. Veeramachineni Sailaja, the Personal Guarantor of SVSVS Projects Private Limited. The bank claims that the Personal Guarantor executed a Deed of Guarantee to secure financial assistance granted to the Corporate Debtor on 25.03.2014. 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 Personal Guarantor failed to honor.

## Facts

The Bank of Maharashtra extended financial assistance to SVSVS Projects Private Limited, with Smt. Veeramachineni Sailaja acting as the Personal Guarantor, executing a Deed of Guarantee on 25.03.2014. The outstanding debt as of 27.12.2018 was Rs. 48,02,97,568.69. The Corporate Debtor defaulted, leading to CIRP proceedings initiated on 26.04.2021. The bank issued a demand notice to the Personal Guarantor on 31.07.2021, which was not honored. The Personal Guarantor claimed the guarantee was revoked due to non-execution of further agreements for revised terms. However, a revival letter dated 15.03.2017, executed by the Personal Guarantor, acknowledged and extended the Deed Guarantee. The Personal Guarantor also submitted a Resolution Plan on 30.04.2022 and an OTS proposal

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## Issues and analysis

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

**Ratio:** The principle of estoppel prevents the Personal Guarantor from contending against the

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**Reasoning:** The Adjudicating Authority found that the Personal Guarantor's plea of revocation of the

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**Interpretation:** Section 100 of the IBC allows for the initiation of the Insolvency Resolution

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**Application:** The revival letter, executed by the Personal Guarantor, directly contradicts

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** SVSVS Projects…; Veeramachineni…

## Timeline

- **2014-03-25 — Deed of Guarantee…**: The Personal Guarantor executed a Deed of Guarantee to secure financial assistance…
- **2018-12-27 — Outstandin…**: The outstanding debt as on…

## 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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