# In the matter of Power Finance Corporation Ltd Vs. Sreenivas Motupalli

> NCLT judgment dated 2023-05-24. Citation: TCN-2023-NCLT-03215. The case involves an application filed by Power Finance Corporation Limited (Financial…

- **Court:** NCLT
- **Order date:** 24 May 2023
- **Citation:** TCN-2023-NCLT-03215
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/power-finance-corporation-ltd-vs-sreenivas-motupalli-1a952f03

## Summary

### Background

The case involves an application filed by Power Finance Corporation Limited (Financial Creditor) against Mr. Sreenivas Motupalli (Personal Guarantor) to initiate Insolvency Resolution Process due to default by the Corporate Debtor, Krishna Godavari Power Utilities Ltd., for whom the Personal Guarantor stood as guarantor. The Financial Creditor extended a term loan to the Corporate Debtor, and the Corporate Debtor defaulted, leading to the account being declared NPA. The application was filed under Section 95 of the IBC, 2016.

## Facts

Power Finance Corporation Limited (Financial Creditor) extended a term loan to Krishna Godavari Power Utilities Ltd. (Corporate Debtor) vide Sanction Letter dated 2007-04-27 and a Common Rupee Loan Agreement executed on 2007-10-25. The Corporate Debtor defaulted on the loan, and the account was declared NPA with effect from 2014-01-15. The Corporate Debtor acknowledged the debt via letter dated 2016-10-08. The Corporate Debtor issued a balance confirmation letter on 2018-01-11 for the period ending 2017-12-31 and from 2020-03-15 to 2022-02-28. The Financial Creditor issued a recall notice of the loan on 2018-02-23, but no payment was received. A notice of invocation of Personal Guarantee was sent on 2018-03-28, but the Personal Guarantor failed to pay, with default

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor against the Personal Guarantor is …

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

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**Reasoning:** The Corporate Debtor defaulted on the loan provided by the Financial Creditor. Mr.

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**Interpretation:** Section 95 provides a mechanism for creditors to recover debts from personal

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**Application:** The court applied Section 95 to the facts of the case, noting that the

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## Parties

- **Judges:** TELAPROLU…; SH. CHARAN…
- **Appellants:** Power Finance…
- **Respondents:** Krishna Godavari…; Srinivas Mo…

## Timeline

- **2007-04-27 — Sanction Lett…**: The Financial Creditor extended a Term Loan to…
- **2007-10-25 — Common Rupee Loan…**: A Common Rupee Loan Agreement was executed between the Financial Creditor and the…

## 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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