# In the matter of State Bank of India vs. LaxmiNarayan Reddy

> NCLT judgment dated 2024-12-03. Citation: TCN-2024-NCLT-00106. The case involves an application for bankruptcy against Mr. M. Laxmi Narayana Reddy, the…

- **Court:** NCLT
- **Order date:** 3 Dec 2024
- **Citation:** TCN-2024-NCLT-00106
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-laxminarayan-reddy-aada6a85

## Summary

### Background

The case involves an application for bankruptcy against Mr. M. Laxmi Narayana Reddy, the personal guarantor of M/s. Vishwa Infrastructures and Services Private Limited. State Bank of India, the financial creditor, filed the application after the corporate debtor availed various credit facilities and subsequently defaulted on repayment. Despite restructuring efforts, the debt was declared a Non-Performing Asset (NPA). The financial creditor initiated actions under the SARFAESI Act and filed OA.No. 559 of 2018 before the Debt Recovery Tribunal. The corporate debtor was admitted into Corporate Insolvency Resolution Process (CIRP) and later liquidation. The personal guarantor's resolution process failed, leading to the creditor filing a bankruptcy application.

## Facts

State Bank of India (SBI) extended credit facilities to Vishwa Infrastructures and Services Private Limited, for which Mr. M. Laxmi Narayana Reddy acted as the personal guarantor. The corporate debtor defaulted on its repayment obligations, leading to the account being classified as a Non-Performing Asset (NPA) on 01.10.2013. SBI initiated recovery proceedings under the SARFAESI Act and filed OA.No. 559 of 2018 before the Debt Recovery Tribunal. The corporate debtor was admitted into CIRP on 31.08.2018 and subsequently into liquidation on 14.06.2019. The personal guarantor's resolution process failed, and SBI filed CP(IB) No. 312/95/HDB/2021 under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate bankruptcy proceedings against the personal

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## Issues and analysis

### Issue 1: Whether the Applicant/Creditor is entitled to proceed against the Respondent/Guarantor for …

**Ratio:** Section 121 of the Insolvency and Bankruptcy Code, 2016, allows a creditor to file for

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**Reasoning:** The court reasoned that the resolution process initiated against the Respondent/Guarantor

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**Interpretation:** The interpretation of Section 121 and 123 of the Insolvency and Bankruptcy

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**Application:** In this case, the court applied the ratio to the facts by noting that the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** State Bank of…
- **Respondents:** Vishwa Infrastruct…; M. Laxmi Narayana…
- **Advocates:** Mr.V.V.S.…

## Timeline

- **2013-10-01 — Account Decla…**: The debt was declared as…
- **2018-08-31 — CIRP Admi…**: Respondent No.2/ Corporate Debtor admitted into Corporate Insolvency Resolution Process…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 121 — Application for bankruptcy](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-121)

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