# In the matter of Central Bank of India Vs. Chavva Naga Lakshmi, CP (IB) No. 93/95/AMR/2022

> NCLT judgment dated 2022-10-10. Citation: TCN-2022-NCLT-00794. The Central Bank of India, as the Financial Creditor, filed a petition against Smt. Chavva Naga…

- **Court:** NCLT
- **Order date:** 10 Oct 2022
- **Citation:** TCN-2022-NCLT-00794
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-chavva-naga-lakshmi-cp-1810a8ea

## Summary

### Background

The Central Bank of India, as the Financial Creditor, filed a petition against Smt. Chavva Naga Lakshmi, the Personal Guarantor (Respondent No. 1), and Sri Ananda Lakshmi Narasimha Industries India Private Limited, the Corporate Debtor (Respondent No. 2), under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016. The Financial Creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP). The application was filed because the Corporate Debtor defaulted on credit facilities availed from the Financial Creditor, for which Respondent No. 1 acted as a personal guarantor. Despite a recall letter and a Debt Recovery Tribunal (DRT) order directing the Corporate Debtor to pay the outstanding amount, the debt remained unpaid.

## Facts

The Central Bank of India (Financial Creditor) extended credit facilities totaling INR 33,18,09,761.02 to Sri Ananda Lakshmi Narasimha Industries India Private Limited (Corporate Debtor/Respondent No.2). Smt. Chavva Naga Lakshmi (Respondent No.1) acted as a Personal Guarantor for these facilities, executing Form Guarantees on 13.03.2013, 29.03.2014, September-2016, and 01.11.2016. The Corporate Debtor defaulted on repayment, leading the Financial Creditor to issue a recall letter on 17.03.2020, demanding INR 32,34,97,219.64 within seven days. The Corporate Debtor failed to comply. Consequently, the Financial Creditor approached the Debt Recovery Tribunal (DRT) on 05.08.2020 (O.A.No.261/2020). The DRT ordered the Corporate Debtor on 04.04.2022 to pay INR 33,93,23,650.15

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## Issues and analysis

### Issue 1: Whether notice to the Personal Guarantor is required before the appointment of an Interim …

**Ratio:** The ratio is that based on the provisions of the IBC, specifically Sections 97, 99, and

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**Reasoning:** The court reasoned that the legislature has enacted provisions in the IBC that are

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**Interpretation:** The interpretation is that the IBC provisions, when read together with relevant

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**Application:** The court applied this ratio to the facts of the case, concluding that the

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## Parties

- **Judges:** TELAPROLU…
- **Appellants:** Central Bank of…
- **Respondents:** Ananda Lakshmi…; Chavva Naga…

## Timeline

- **2013-03-13 — Execution of Form…**: Respondent No.1 executed Form…
- **2014-03-29 — Execution of Form…**: Respondent No.1 executed Form…

## 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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