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

> NCLT judgment dated 2023-01-25. Citation: TCN-2023-NCLT-04894. The Central Bank of India, as the Financial Creditor (FC), filed a Company Petition under…

- **Court:** NCLT
- **Order date:** 25 Jan 2023
- **Citation:** TCN-2023-NCLT-04894
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-chavva-naga-lakshmi-cp-983cc6d1

## Summary

### Background

The Central Bank of India, as the Financial Creditor (FC), filed a Company Petition under Section 60(2) and 95 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The petition seeks to initiate an Insolvency Resolution Process against Mrs. Chavva Naga Lakshmi, the Personal Guarantor of Sri Ananda Lakshmi Narasimha Industries India Private Limited (Corporate Debtor). The Corporate Debtor availed various credit facilities from the FC, with Mrs. Chavva Naga Lakshmi acting as the guarantor. The Corporate Debtor defaulted on repayments, leading to the FC approaching the Debt Recovery Tribunal (DRT).

## Facts

The Central Bank of India (FC) extended various credit facilities to Sri Ananda Lakshmi Narasimha Industries India Private Limited (CD). Mrs. Chavva Naga Lakshmi stood as a guarantor for these credit facilities. The CD defaulted on its repayment obligations, resulting in loan accounts becoming irregular. The FC issued a recall letter on 2020-03-17, requesting the CD to clear dues of Rs.32,34,97,219.64/- within 7 days, but the CD failed to repay. Consequently, the FC approached the Debt Recovery Tribunal (DRT), which directed the CD to pay Rs.33,93,23,650.15/- as on 2020-08-03. The FC relied on a Supreme Court judgment (Dena Bank vs. C.Shivkumar Reddy) stating that a judgment or decree for money in favor of the FC would give rise to a fresh cause of action to initiate

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## Issues and analysis

### Issue 1: Whether the Company Petition filed by the Financial Creditor under Section 60(2) and 95 of the …

**Ratio:** Section 95 of the IBC allows a creditor to initiate insolvency resolution process against

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**Reasoning:** The court reasoned that the Financial Creditor had presented sufficient evidence to

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**Interpretation:** Section 95 of the IBC is interpreted to provide a mechanism for creditors to

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**Application:** In this case, the Financial Creditor followed the procedure outlined in Section

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## Parties

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

## Timeline

- **2013-03-13 — Credit Facilities…**: Corporate Debtor availed credit…
- **2014-03-29 — Credit Facilities…**: Corporate Debtor availed credit…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(2) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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