# 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-03143. 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-03143
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-aarti-agarwal-cp-63223e57

## 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, leading

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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 provided a personal guarantee for the loan. The Corporate Debtor defaulted, leading to restructuring of the payment schedule on 11.02.2013. Aarti Agarwal stood as a guarantor to secure the repayment of the financial assistance availed by the Corporate Debtor. The outstanding amount in default was Rs. 7,29,36,344.03. The Corporate Debtor's account was classified as NPA on 29.06.2018. The Financial Creditor invoked the personal guarantee. The Financial Creditor initiated proceedings under the SARFAESI Act and filed a company petition under Section 7 of the Code to initiate CIRP against the Corporate Debtor, which was admitted on

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## Issues and analysis

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

**Ratio:** Availing of credit facilities by the Principal Borrower/Corporate Debtor, execution of

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

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**Interpretation:** The issue revolves around whether the conditions precedent for initiating the

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**Application:** The Tribunal applied the principle that if a valid guarantee exists and the

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## Parties

- **Judges:** Venkata Ramakrishn…; Veera Brahma Rao…
- **Appellants:** Central Bank of…
- **Respondents:** Rajvir Industries…; Aarti Ag…

## Timeline

- **2009-01-01 — Loan San…**: Central Bank of India sanctioned Rs.…
- **2013-02-11 — Payment Schedule…**: Payment schedule was modified…

## 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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