# In the matter of Central Bank of India Vs. Kothapatti Raju, CP (IB) No. 89/95/AMR/2022

> NCLT judgment dated 2023-01-25. Citation: TCN-2023-NCLT-04895. 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-04895
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-kothapatti-raju-cp-01106d67

## 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, 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, seeking to initiate the Insolvency Resolution Process against Mr. Kothapatti Raju, the Personal Guarantor of Sri Ananda Lakshmi Narasimha Industries Private Limited (Corporate Debtor). The Corporate Debtor availed various credit facilities from the FC, and Mr. Kothapatti Raju stood as guarantor. The FC approached the Debt Recovery Tribunal (DRT) after the Corporate Debtor failed to repay its debts. The DRT directed the Corporate Debtor to pay a

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## Facts

Central Bank of India (Financial Creditor) filed a petition against Mr. Kothapatti Raju (Personal Guarantor) and Sri Ananda Lakshmi Narasimha Industries Private Limited (Corporate Debtor) under Section 60(2) and 95 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor availed credit facilities from the Financial Creditor, with Mr. Kothapatti Raju acting as the guarantor. The Corporate Debtor defaulted on repayments, leading the Financial Creditor to approach the Debt Recovery Tribunal (DRT), which issued an order directing the Corporate Debtor to pay Rs. 33,93,23,650.15/- as of 03.08.2020. The Financial Creditor then issued a Form-B demand notice to the Personal Guarantor, who failed to clear the outstanding dues. The Financial Creditor relied on a Supreme

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## Issues and analysis

### Issue 1: Whether the Company Petition filed under Section 60(2) and 95 of the Insolvency and Bankruptcy …

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

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**Reasoning:** The court considered the arguments of the Financial Creditor and the fact that the

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**Interpretation:** Section 95 of the IBC provides a mechanism for financial creditors to recover

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**Application:** In this case, the Financial Creditor has demonstrated that Mr. Kothapatti Raju

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## Parties

- **Judges:** TELAPROLU…
- **Appellants:** Central Bank of…
- **Respondents:** Ananda Lakshmi…; Kothapatt…
- **Advocates:** Mr.V.V.S.…

## Timeline

- **2013-03-13 — Guarantee Ex…**: Mr. Kothapatti Raju executed a 'Form of…
- **2014-03-29 — Guarantee Ex…**: Mr. Kothapatti Raju executed a 'Form of…

## 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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