# In the matter of Rakesh Rameshkumar Shah

> NCLT judgment dated 2024-01-08. Citation: TCN-2024-NCLT-03268. The case involves an application filed under Section 94(1) of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 8 Jan 2024
- **Citation:** TCN-2024-NCLT-03268
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/rakesh-rameshkumar-shah-7130744a

## Summary

### Background

The case involves an application filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) by Rakesh Rameshkumar Shah, a personal guarantor to Devkrut Engineers Pvt. Ltd. The Financial Creditor, Tamilnad Mercantile Bank Ltd., had sanctioned a working capital loan to Devkrut Engineers Pvt. Ltd., which defaulted on repayment. The IRP recommended acceptance of the petition, citing the corporate debtor's default and compliance with Sections 94 and 99 of the IBC. The Financial Creditor initiated recovery proceedings under the SARFAESI Act, including taking symbolic possession of mortgaged property. The debtor filed the application seeking a moratorium under Section 96 of the IBC, which the Tribunal found to be an attempt to thwart recovery proceedings.

## Facts

Rakesh Rameshkumar Shah is a personal guarantor for a loan availed by Devkrut Engineers Pvt. Ltd. from Tamilnad Mercantile Bank Ltd. The bank sanctioned a working capital loan of Rs. 1.50 Crores to Devkrut Engineers Pvt. Ltd. The loan was secured by a personal guarantee from Rakesh Rameshkumar Shah and a mortgage of immovable property. Devkrut Engineers Pvt. Ltd. defaulted on the loan, leading to the account being classified as NPA on 31.03.2021, with an outstanding amount of Rs. 1,65,54,866.21. The bank issued a demand notice under the SARFAESI Act on 12.04.2021 and took symbolic possession of the mortgaged property on 28.06.2021. Rakesh Rameshkumar Shah filed an application under Section 94(1) of the IBC seeking a moratorium. The IRP recommended acceptance of the

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## Issues and analysis

### Issue 1: Whether the application filed by the debtor under …

**Ratio:** The Tribunal has the power to reject an application filed under Section 94(1) of the IBC

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**Reasoning:** The Tribunal found that the debtor's application was filed with the sole intention of

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**Interpretation:** Section 94(1) of the IBC allows a debtor to initiate insolvency proceedings.

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**Application:** The Tribunal applied the ratio to the facts of the case and found that the

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## Parties

- **Judges:** SHAMMI…; SAMEER…
- **Appellants:** Rakesh Rameshkumar…
- **Respondents:** Devkrut Engineers…; Tamilnad Mercantil…

## Timeline

- **2017-05-29 — Incorporation of…**: Devkrut Engineers Pvt.…
- **2020-01-28 — Last Renewal…**: The loan to Devkrut Engineers…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 94 — Application by debtor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-94)

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