# 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-04884. 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-04884
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/central-bank-of-india-vs-kothapatti-raju-cp-6f4fe33b

## 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 the Corporate Debtor (Sri Ananda Lakshmi Narasimha Industries Private Limited). The Corporate Debtor availed various credit facilities from the FC, with Mr. Kothapatti Raju acting as guarantor. The FC approached the Debt Recovery Tribunal (DRT) after the Corporate Debtor failed to repay the debts, and the DRT directed the CD to pay a sum

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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). The Corporate Debtor availed credit facilities from the Financial Creditor, with Mr. Kothapatti Raju acting as guarantor. The Corporate Debtor defaulted on repayment, leading the Financial Creditor to approach the Debt Recovery Tribunal (DRT). The DRT ordered the Corporate Debtor to pay Rs.33,93,23,650.15/- as on 03.08.2020. The Financial Creditor issued a demand notice to Mr. Kothapatti Raju, who failed to clear the dues. The Financial Creditor relied on a Supreme Court judgment stating that a decree in favor of the Financial Creditor gives rise to a fresh cause of action under

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## Issues and analysis

### Issue 1: Whether the Company Petition filed under Section 95 of the IBC, 2016 is maintainable against the …

**Ratio:** Section 95 of the IBC, 2016 allows a financial creditor to initiate insolvency resolution

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**Reasoning:** The court considered that the Corporate Debtor had defaulted on its debt obligations to

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**Interpretation:** Section 95 of the IBC is interpreted to mean that if a corporate debtor

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**Application:** Given the Corporate Debtor's default and Mr. Kothapatti Raju's role as

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## Parties

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

## Timeline

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