# In the matter of Ford Credit India Pvt Ltd Vs. Ritu Bhatia, CP (IB)256(ND)/2021

> NCLT judgment dated 2022-08-01. Citation: TCN-2022-NCLT-01509. The case involves an application filed by Ford Credit India Private Limited, a financial…

- **Court:** NCLT
- **Order date:** 1 Aug 2022
- **Citation:** TCN-2022-NCLT-01509
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ford-credit-india-pvt-ltd-vs-ritu-bhatia-cp-aa671ff3

## Summary

### Background

The case involves an application filed by Ford Credit India Private Limited, a financial creditor, under Section 95(1) read with Section 60(2) of the Insolvency and Bankruptcy Code, 2016, and Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019, to initiate the Insolvency Resolution Process against Ms. Ritu Bhatia, a personal guarantor to Montesa Motors LLP. Ford Credit had extended a loan facility to Rain Automotive India Private Limited ('Corporate Debtor'), with Ritu Bhatia acting as one of the personal guarantors. The Corporate Debtor underwent Corporate Insolvency Resolution Process initiated on 14.06.2019, which later resulted in a liquidation

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## Facts

Ford Credit India Private Limited extended a loan facility to Rain Automotive India Private Limited ('Corporate Debtor') under a Dealer Wholesale Financing Agreement dated 2016-08-02. Ms. Ritu Bhatia acted as a personal guarantor for the loan, executing a 'Deed of Guarantee' dated 2016-08-02. The Corporate Debtor underwent Corporate Insolvency Resolution Process initiated on 2019-06-14, which later resulted in a liquidation order on 2020-01-02. Ford Credit, being a financial creditor, held 77.54% of the voting power in the Committee of Creditors (COC). Due to the non-realization of the loan facility, Ford Credit invoked the personal guarantee and issued a demand notice in Form B dated 2020-08-26 to Ms. Ritu Bhatia and other guarantors, demanding Rs. 2,59,70,606/-. The

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## Issues and analysis

### Issue 1: Whether the application to initiate the Insolvency Resolution Process against the personal …

**Ratio:** The ratio is based on the interpretation of Section 95(1) of the Insolvency and

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**Reasoning:** The court reasoned that the applicant, Ford Credit, had extended a loan facility to the

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**Interpretation:** Section 95(1) of the IBC is interpreted to mean that when a corporate debtor

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**Application:** In this case, the Corporate Debtor defaulted on the loan from Ford Credit, and

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## Parties

- **Judges:** Sh. Dharminder…; SH. L. N.…
- **Appellants:** M/s. Ford Credit…
- **Respondents:** M/s Rain Automotiv…; M/s. Ritu…

## Timeline

- **2016-08-02 — Loan Facility…**: Ford Credit India Private Limited extended a loan facility to Rain Automotive India…
- **2016-08-02 — Deed of Gua…**: Ms. Ritu Bhatia executed a 'Deed of Guarantee' in favor of Ford Credit India Private…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 95(1) — Application by creditor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-95)

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