# In the matter of Central Bank of India Vs. Aarti Agarwal, CP (IB) No. 248/2021

> NCLT judgment dated 2022-04-21. Citation: TCN-2022-NCLT-03151. The Central Bank of India, acting as the Financial Creditor, filed a petition under Section 95…

- **Court:** NCLT
- **Order date:** 21 Apr 2022
- **Citation:** TCN-2022-NCLT-03151
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-aarti-agarwal-cp-533209c2

## Summary

### Background

The Central Bank of India, acting as the Financial Creditor, filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the Insolvency & 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 Smt. Aarti Agarwal, the Personal Guarantor of M/s Rajvir Industries Ltd. The Financial Creditor had sanctioned Rs. 20 crores to the Corporate Debtor in 2009, which was to be repaid by July 2014. Due to the Corporate Debtor's inability to repay, the payment schedule was modified in 2013. Aarti Agarwal stood as a guarantor to secure the repayment. The Corporate Debtor defaulted despite

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## Facts

Central Bank of India sanctioned a term loan of Rs. 20 crores to Rajvir Industries Ltd. in 2009, to be repaid by July 2014. Aarti Agarwal stood as a personal guarantor for the loan. The loan repayment schedule was modified on 11.02.2013 due to the Corporate Debtor's inability to repay. The Corporate Debtor defaulted, leading to the account being classified as NPA on 29.06.2018. The outstanding amount in default is Rs. 7,29,36,344.03. The Financial Creditor invoked the personal guarantee and initiated proceedings under the SARFAESI Act, filing OA No. 76 of 2020 before the Debt Recovery Tribunal-II Hyderabad. A company petition under Section 7 of the Code was also filed and admitted on 26.04.2021. The Financial Creditor issued demand notices to the Personal Guarantor,

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## Issues and analysis

### Issue 1: Whether Insolvency Resolution Process can be ordered …

**Ratio:** The ratio is based on the interpretation of Section 95 of the Insolvency and Bankruptcy

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**Reasoning:** The Tribunal noted that the Corporate Debtor availed credit facilities, and the Personal

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**Interpretation:** The interpretation involves understanding the scope and applicability of

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**Application:** The ratio and reasoning are applied to the facts of the case, where the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** Central Bank of…
- **Respondents:** Rajvir Industries…; Aarti Ag…

## Timeline

- **2009-01-01 — Loan San…**: Central Bank of India sanctioned a term loan…
- **2013-02-11 — Payment Schedule…**: The payment schedule was modified due to the Corporate Debtor's inability to repay the…

## 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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