# In the matter of State Bank of India Vs. Balbir Sharma, CP (IB) No. 916/ (PB)/2020

> NCLT judgment dated 2022-02-25. Citation: TCN-2022-NCLT-03963. The State Bank of India filed an application under Section 95(1) of the Insolvency & Bankruptcy…

- **Court:** NCLT
- **Order date:** 25 Feb 2022
- **Citation:** TCN-2022-NCLT-03963
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-balbir-sharma-cp-3f178055

## Summary

### Background

The State Bank of India filed an application under Section 95(1) of the Insolvency & Bankruptcy Code against Sh. Balbir Sharma. The application was regarding the personal guarantor. The applicant SBI sought liberty to file bankruptcy proceeding against the legal heirs.

## Facts

The State Bank of India (SBI) filed an application against Sh. Balbir Sharma under Section 95(1) of the Insolvency & Bankruptcy Code (IBC). The application concerned a personal guarantor. During the proceedings, it was confirmed that the personal guarantor had passed away. Consequently, the counsel for SBI sought permission from the court to initiate bankruptcy proceedings against the legal heirs of the deceased guarantor, as per Section 123(5) of the IBC. The relevance of the guarantor's death is that it necessitated a change in the target of the bankruptcy proceedings from the guarantor to their legal heirs.

## Issues and analysis

### Issue 1: Whether the applicant SBI should be granted liberty to file bankruptcy proceedings against the …

**Ratio:** The legal principle applied is that when a personal guarantor dies, the creditor may seek

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**Reasoning:** The court reasoned that since the personal guarantor had died, it was necessary to allow

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**Interpretation:** The interpretation of Section 123(5) of the IBC is that it provides a mechanism

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**Application:** The ratio and reasoning were applied to the specific facts of the case, where

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## Parties

- **Judges:** Ramalingam…; AVINASH K.…
- **Appellants:** State Bank of…
- **Respondents:** Sh. Balbir…

## Timeline

- **N/A — IA-458/2022…**: Application filed by the State Bank of India confirming the death of the personal…
- **2022-02-25 — Order Del…**: Order delivered granting liberty to file bankruptcy proceeding against the legal heirs as…

## 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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