# In the matter of State Bank of India Vs. Kondapalli Udayananda, CP (IB)/10/95/HDB/2021

> NCLT judgment dated 2023-03-16. Citation: TCN-2023-NCLT-04223. This case involves a petition filed by the State Bank of India (SBI), the Financial Creditor…

- **Court:** NCLT
- **Order date:** 16 Mar 2023
- **Citation:** TCN-2023-NCLT-04223
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-kondapalli-udayananda-cp-1bd86ad5

## Summary

### Background

This case involves a petition filed by the State Bank of India (SBI), the Financial Creditor (FC), under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The petition seeks the initiation of the Individual Insolvency Resolution Process (IR Process) against Mr. Kondapalli Udayananda Reddy, the Respondent, who is the Personal Guarantor (PG) to the Corporate Debtor (CD). The application is based on the CD's failure to discharge its debt to the FC, for which the Respondent stood as Guarantor. The CD was already taken into CIRP. A demand notice was issued to the PG on 2020-08-10 for

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## Facts

The State Bank of India (SBI) filed a petition under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate the Individual Insolvency Resolution Process against Mr. Kondapalli Udayananda Reddy, who acted as the Personal Guarantor for Kondapalli Udayananda & Sagar Infra Rail International Ltd, the Corporate Debtor (CD). The CD failed to discharge a debt of Rs.71,47,35,477.90 owed to SBI, leading to the guarantor's liability. A demand notice was issued to the PG on 2020-08-10. The CD was already undergoing Corporate Insolvency Resolution Process (CIRP). The PG, along with his parents, was involved in the business of manufacturing Thermit Welding Portions since 1984. The CD had entered into a Joint Venture with Ultimate Power Electro – Mechanical

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## Issues and analysis

### Issue 1: Whether the application under Section 95 of the IBC for initiating Individual Insolvency Resolution …

**Ratio:** Section 95 of the IBC allows a creditor to initiate insolvency proceedings against a

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**Reasoning:** The court considered the fact that the Corporate Debtor had failed to discharge its debt

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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:** State Bank of…
- **Respondents:** Kondapalli…; Kondapalli…

## Timeline

- **2020-08-10 — Demand Notice…**: A demand notice was issued to the Personal…
- **2019-08-08 — CIRP Ord…**: Corporate Debtor was…

## 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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