# In the matter of State Bank of India Vs. Awaiz Ahamed, CP(IB) No. 8/BB/2021

> NCLT judgment dated 2022-06-07. Citation: TCN-2022-NCLT-02345. The State Bank of India, acting as the Financial Creditor, filed an application under Section…

- **Court:** NCLT
- **Order date:** 7 Jun 2022
- **Citation:** TCN-2022-NCLT-02345
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-awaiz-ahamed-cp-19f3a35f

## Summary

### Background

The State Bank of India, acting as the Financial Creditor, filed an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, seeking to initiate an Insolvency Resolution Process against Mr. Awaiz Ahamed, the Personal Guarantor for credit facilities extended to M/s. Scotts Garments Limited, the Corporate Debtor. The Corporate Debtor had previously undergone Corporate Insolvency Resolution Process (CIRP) initiated by an Operational Creditor, M/s. Saravana Distributors, which was admitted on 13.08.2018, and a resolution plan was approved on 16.09.2019. However, the Resolution Applicant failed to comply with the Resolution Plan. The Financial Creditor invoked the Personal Guarantee of Mr. Awaiz Ahamed and issued a demand notice, which the Guarantor

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## Facts

State Bank of India (SBI), the Financial Creditor, filed an application under Section 95(1) of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate the Insolvency Resolution Process against Mr. Awaiz Ahamed, the Personal Guarantor. Mr. Awaiz Ahamed had provided a personal guarantee for credit facilities extended by SBI to M/s. Scotts Garments Limited, the Corporate Debtor. The Corporate Debtor had previously undergone Corporate Insolvency Resolution Process (CIRP) initiated by M/s. Saravana Distributors, an Operational Creditor. The CIRP was admitted on 13.08.2018, and a resolution plan was approved on 16.09.2019. However, the Resolution Applicant failed to comply with the Resolution Plan. SBI invoked the Personal Guarantee of Mr. Awaiz Ahamed by issuing a

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## Issues and analysis

### Issue 1: Whether the application under Section 95 of IBC, 2016 should be admitted against the Personal …

**Ratio:** The liability of the Guarantor is co-extensive with that of the borrower. The creditor

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**Reasoning:** The Tribunal relied on the judgment of the Hon'ble Supreme Court in the matter of

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**Interpretation:** Section 128 of the Indian Contract Act, 1872 states that the liability of the

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**Application:** In this case, the Financial Creditor is entitled to proceed against the

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## Parties

- **Judges:** Ajay Kumar…; Manoj Kumar…
- **Appellants:** State Bank of…
- **Respondents:** M/s. Scotts…; Awaiz A…

## Timeline

- **2018-03-18 — Corporate Debtor…**: M/s. Scotts Garments Limited was…
- **2018-08-13 — CIRP Admi…**: Corporate Insolvency Resolution Process…

## 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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