# In the matter of Shaliwahan Farms Private Limited CP(IB)-1280(MB)-2022

> NCLT judgment dated 2023-03-03. Citation: TCN-2023-NCLT-04318. State Bank of India filed a Company Petition under Section 7 of the Insolvency & Bankruptcy…

- **Court:** NCLT
- **Order date:** 3 Mar 2023
- **Citation:** TCN-2023-NCLT-04318
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/shaliwahan-farms-private-limited-cpib-1280mb-2022-6a851bb4

## Summary

### Background

State Bank of India filed a Company Petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against Shaliwahan Farms Private Limited, the Corporate Debtor/Guarantor. The petition was based on the Corporate Guarantor's liability to pay ₹26,44,96,625/- due to the Principal Borrower's default. The Financial Creditor had provided loan facilities to Deogiri Infrastructure Pvt. Ltd. (Principal Borrower), with Shaliwahan Farms acting as the Corporate Guarantor. The date of default was 10.04.2019.

## Facts

State Bank of India (Financial Creditor) filed a petition under Section 7 of the IBC to initiate CIRP against Shaliwahan Farms Private Limited (Corporate Debtor/Guarantor). The petition was based on a guarantee agreement executed by Shaliwahan Farms securing the debt of Deogiri Infrastructure Pvt. Ltd. (Principal Borrower). The Principal Borrower defaulted on a loan of ₹26,44,96,625/-, with the date of default being 10.04.2019. The Financial Creditor had issued a notice under Section 13(2) of the SARFAESI Act to the Principal Borrower on 10.04.2019, calling upon them to repay the outstanding dues. A copy of this notice was sent to the Guarantor. The Financial Creditor argued that the Corporate Guarantor was liable to pay the outstanding amount. The Corporate

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## Issues and analysis

### Issue 1: Whether the Financial Creditor made a proper demand upon the Corporate Guarantor before initiating …

**Ratio:** A demand upon the guarantor is a prerequisite for initiating CIRP against the guarantor

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**Reasoning:** The court reasoned that the Financial Creditor had not made any demand upon the

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**Interpretation:** The court interpreted the requirement of a demand as a necessary condition for

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**Application:** In this case, the Financial Creditor failed to issue a specific demand notice

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## Parties

- **Judges:** Prabhat…; KISHORE VEMULAPALL…
- **Appellants:** State Bank of…
- **Respondents:** Shaliwahan Farms…
- **Advocates:** Dheeraj…; G. Aniruth…

## Timeline

- **1998-12-24 — Incorporation of…**: Shaliwahan Farms Private Limited…
- **2007-11-06 — Sanction…**: Sanction Letter issued for loan facility to Principal Borrower/Corporate Debtor for ₹80…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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