# In the matter of Bank of Maharastra vs. NNBV Venkateswara Rao

> NCLT judgment dated 2023-04-28. Citation: TCN-2023-NCLT-03573. The Financial Creditor, Bank of Maharashtra, filed a petition under Section 95 of the…

- **Court:** NCLT
- **Order date:** 28 Apr 2023
- **Citation:** TCN-2023-NCLT-03573
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bank-of-maharastra-vs-nnbv-venkateswara-rao-583e3ede

## Summary

### Background

The Financial Creditor, Bank of Maharashtra, filed a 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 Debtor) Rules, 2019, seeking initiation of the Insolvency Resolution Process against NNBV Venkateshwara Rao, the Personal Guarantor of M/s. SVSVS Projects Private Limited (Corporate Debtor). The Petitioner Bank had sanctioned working capital facilities to the Corporate Debtor, which the Corporate Debtor failed to honor. The loan account of the Corporate Debtor was declared NPA on 27.12.2018. The Personal Guarantor had executed a Deed of Guarantee on 25.03.2014 to secure the financial

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## Facts

The Bank of Maharashtra, the Financial Creditor, sanctioned working capital facilities to M/s. SVSVS Projects Private Limited, the Corporate Debtor. These facilities included a Cash Credit facility with a limit of Rs.2.50 crores and bank guarantee facilities aggregating to Rs.48 crores. The Corporate Debtor failed to honor its obligations under the Composite Deed of Hypothecation dated 25.03.2014. The loan account of the Corporate Debtor was declared NPA on 27.12.2018. NNBV Venkateshwara Rao, the Personal Guarantor, executed a Deed of Guarantee on 25.03.2014 to secure the financial assistance granted to the Corporate Debtor. The Financial Creditor issued a Form B demand notice dated 31.07.2021 to the Personal Guarantor, requesting him to honor the terms of 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 ratio is based on the interpretation of Section 95 and Section 100 of the Insolvency

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**Reasoning:** The Adjudicating Authority considered the report of the Resolution Professional, which

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**Interpretation:** The interpretation of Section 95 and Section 100 of the IBC, 2016, allows for

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**Application:** In this case, the Corporate Debtor defaulted on its obligations, and the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Bank of Mah…
- **Respondents:** M/s. SVSVS…; Shri. NNBV…

## Timeline

- **2014-03-24 — Sanction Lett…**: Sanction Letter issued…
- **2014-03-25 — Deed of Gua…**: Deed of Guarantee…

## 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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