# In the matter of Central Bank of India Vs. Kotha Venkat Rao, CP (IB) No. 103/95/AMR/2022

> NCLT judgment dated 2022-10-21. Citation: TCN-2022-NCLT-00644. Central Bank of India filed a company petition against Mr. Kotha Venkata Rao, the personal…

- **Court:** NCLT
- **Order date:** 21 Oct 2022
- **Citation:** TCN-2022-NCLT-00644
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-kotha-venkat-rao-cp-13cc2501

## Summary

### Background

Central Bank of India filed a company petition against Mr. Kotha Venkata Rao, the personal guarantor, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The financial creditor had sanctioned a term loan of Rs. 35 Crores to the Corporate Debtor, who failed to repay the loan, leading to the account being declared as NPA. The Corporate Debtor acknowledged the loan amount, and the petitioner issued a demand notice under the SARFAESI Act. The petitioner took possession of the mortgaged securities and issued a sale notice, but the auction was stayed by the DRT. The Corporate Debtor submitted OTS proposals, which were not fulfilled, leading to the current application for CIRP.

## Facts

Central Bank of India (Financial Creditor) sanctioned a term loan of Rs. 35 Crores to a Corporate Debtor on 2013-04-23. The Corporate Debtor executed a Term Loan Agreement and a letter of Hypothecation on 2013-05-06, creating an equitable mortgage. Mr. Kotha Venkata Rao (Respondent) stood as a guarantor for the loan. The Corporate Debtor defaulted on the loan, and the account was declared NPA on 2015-07-29. The Corporate Debtor acknowledged the debt on 2017-02-21. The Financial Creditor issued a demand notice under the SARFAESI Act on 2018-01-01. The Corporate Debtor failed to repay. The Financial Creditor took possession of mortgaged securities and issued a sale notice on 2021-02-10, with an auction date of 2021-03-15. The DRT Visakhapatnam stayed the auction. The

…

## Issues and analysis

### Issue 1: Whether notice is required to be given to the Personal Guarantor at the stage of appointment of …

**Ratio:** The principles of natural justice, as considered by the Bombay High Court, are not

…

**Reasoning:** The court reasoned that the legislature has enacted unambiguous provisions regarding the

…

**Interpretation:** Section 95 of the IBC, read with related rules and precedents, does not mandate

…

**Application:** In this case, the court found that not providing notice to Mr. Kotha Venkata

…

## Parties

- **Judges:** TELAPROLU…
- **Appellants:** Central Bank of…
- **Respondents:** M/s KVR Power…; Mr.Kotha Venkata…
- **Advocates:** PBA Srini…; Parth T…; +3 more

## Timeline

- **2013-04-23 — Term Loan San…**: The Petitioner/Financial Creditor sanctioned Term Loan of Rs.35 Crores to the Corporate…
- **2013-05-06 — Term Loan Agreement and…**: The Corporate Debtor executed Term Loan…

## 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)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-kotha-venkat-rao-cp-13cc2501