# In the matter of JM Financial Asset Reconstruction Co Ltd Vs. K G Paul, CP (IBC)/19/KOB/2021

> NCLT judgment dated 2022-03-17. Citation: TCN-2022-NCLT-03675. The petitions were filed by JM Financial Asset Reconstruction Company Limited under Section…

- **Court:** NCLT
- **Order date:** 17 Mar 2022
- **Citation:** TCN-2022-NCLT-03675
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/jm-financial-asset-reconstruction-co-ltd-vs-k-g-paul-cp-334e2550

## Summary

### Background

The petitions were filed by JM Financial Asset Reconstruction Company Limited under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, against Mrs. Reena Paul, Mr. John Zachariah, Mrs. Annu Mathew, Mr. Mathew John, and Mr. K. G. Paul, who are personal guarantors of the Corporate Debtor, M/s. Unitek Power Solutions India Limited. The corporate debtor had availed credit facilities from Federal Bank Limited and defaulted on payments, leading to the account being classified as a non-performing asset. The creditor sought to initiate Corporate Insolvency Resolution Process (CIRP)

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## Facts

M/s. JM Financial Asset Reconstruction Company Limited filed petitions against Mrs. Reena Paul, Mr. John Zachariah, Mrs. Annu Mathew, Mr. Mathew John, and Mr. K. G. Paul, who are personal guarantors to the Corporate Debtor M/s. Unitek Power Solutions India Limited. Unitek Power Solutions India Limited availed credit facilities from Federal Bank Limited. The corporate debtor defaulted with an amount of Rs. 38,56,65,007.80/- as on 31.05.2021. The account was classified as NPA on 31.03.2011. The loans were secured by properties belonging to the guarantors. The guarantors' liability was limited to Rs. 18,00,00,000/-. The financial assets of the Corporate Debtor were assigned to the petitioner via an agreement dated 26.03.2013. The creditor also filed OA No. 376 of 2013

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## Issues and analysis

### Issue 1: Whether this is a fit case for admission and proceed against the Personal Guarantors/ Respondents …

**Ratio:** Section 95 of IBC, 2016 and Section 100 of the IBC, 2016 provide for initiation of

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**Reasoning:** The Tribunal considered the averments in the IBA, the reply of some of the Respondents,

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**Interpretation:** The provisions of IBC allow for the initiation of CIRP against personal

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**Application:** Based on the facts presented and the report of the Resolution Professional, the

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## Parties

- **Judges:** Ashok Kumar…; Anil Ku…
- **Appellants:** M/s. JM Financial…
- **Respondents:** M/s. Unitek Power…; Reena…
- **Advocates:** Shri. Sunil…; Shri. Akhil…

## Timeline

- **2011-03-31 — Account Classified as…**: The Corporate Debtor's account was classified as a non-performing asset (NPA) in the…
- **2013-03-26 — Assignment Ag…**: The financial assets of the Corporate Debtor were assigned by the Federal Bank Ltd. to…

## 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)

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