# In the matter of Canara Bank vs. Manilal Harji Limbani

> NCLT judgment dated 2024-09-04. Citation: TCN-2024-NCLT-00677. Canara Bank filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 4 Sept 2024
- **Citation:** TCN-2024-NCLT-00677
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/canara-bank-vs-manilal-harji-limbani-2b63d172

## Summary

### Background

Canara Bank filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, to initiate the Insolvency Resolution Process against Mr. Manilal Harji Limbani, the personal guarantor, for a term loan of Rs. 50 Crores sanctioned to Elegant Forge & Equipments Private Limited. The corporate debtor defaulted on its payment obligations, leading to the invocation of the personal guarantee.

## Facts

Canara Bank sanctioned a term loan of Rs. 50 Crores to Elegant Forge & Equipments Private Limited on October 5, 2018. Mr. Manilal Harji Limbani provided a personal guarantee dated February 3, 2019, for the loan. The corporate debtor defaulted on its payment obligations, and the account was classified as NPA on November 30, 2021. Canara Bank issued a legal notice on April 13, 2022, to the corporate debtor and Mr. Limbani, followed by a demand notice in Form-B on November 17, 2023. As of November 17, 2023, a sum of Rs. 71,42,72,499.22/- was due. Mr. Limbani secured the term loan by mortgaging two flats. The bank filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, to initiate the Insolvency Resolution Process against Mr. Limbani as the

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## Issues and analysis

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

**Ratio:** Section 95(1) of the Insolvency and Bankruptcy Code, 2016, allows a creditor to file an

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**Reasoning:** The court determined that the application was complete and met the requirements of

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**Interpretation:** The provision allows creditors to pursue personal guarantors for the debts of

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**Application:** The court applied Section 95(1) to the facts, noting that the corporate debtor

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## Parties

- **Judges:** Charanjeet Singh…; Smt Lakshmi…
- **Appellants:** Canara…
- **Respondents:** Elegant Forge &…; Manilal Harji…

## Timeline

- **2018-10-05 — Term Loan San…**: Canara Bank sanctioned a term loan of Rs. 50 Crores to Elegant Forge & Equipments Private…
- **2019-02-03 — Personal Guarantee…**: Mr. Manilal Harji Limbani provided a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 95(1) — Application by creditor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-95)

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