# In the matter of State Bank of India vs. Mohan Prasad Kala

> NCLT judgment dated 2024-02-01. Citation: TCN-2024-NCLT-02824. The case pertains to an application filed under Section 95 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 1 Feb 2024
- **Citation:** TCN-2024-NCLT-02824
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-mohan-prasad-kala-bff9f6ba

## Summary

### Background

The case pertains to an application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, by State Bank of India ("Financial Creditor") to initiate the insolvency resolution process against Mr. Mohan Prasad Kala (“Guarantor”). The application seeks recovery of a principal amount of INR 119,23,65,055.36 along with interest of INR 111,66,09,732.75, totaling INR 231,03,18,820.11 as of 31.07.2021. The date of default is specified as 25.03.2018. The Corporate Debtor, Sharon Bio-medicine Ltd., was admitted into Corporate Insolvency Resolution Process (“CIRP”) vide Order

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## Facts

State Bank of India (SBI), the Financial Creditor, filed a petition under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, against Mr. Mohan Prasad Kala, the Personal Guarantor, seeking to recover INR 231,03,18,820.11, which includes a principal amount of INR 119,23,65,055.36 and interest of INR 111,66,09,732.75 as of July 31, 2021. The default date is March 25, 2018. The debt arises from a guarantee provided by Mr. Kala for the liabilities of Sharon Bio-medicine Ltd. (Corporate Debtor), which was admitted into CIRP on April 11, 2017. SBI had approved a restructuring package for Sharon Bio-medicine Ltd. and executed a Master Restructuring Agreement dated March 30, 2015. Mr. Kala, along with others, executed a Deed of Guarantee dated March 30, 2015, to

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## Issues and analysis

### Issue 1: Whether the application under Section 95 of the Insolvency and Bankruptcy Code, 2016, for …

**Ratio:** The liability of a surety is

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**Reasoning:** The Tribunal considered the Resolution Professional's report recommending the acceptance

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**Interpretation:** Section 95 of the IBC allows a creditor to initiate insolvency resolution

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**Application:** The Tribunal found that the Financial Creditor had a valid claim against the

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## Parties

- **Judges:** Anu Jagmoha…; KISHORE VEMULAPALL…
- **Appellants:** Abhijit S.…
- **Respondents:** Sharon Bio…; Mohan Prasa…

## Timeline

- **2015-03-30 — Master Restructuring…**: Sharon Bio-medicine Ltd. and State Bank of India executed a Master Restructuring…
- **2015-03-30 — Deed of Gua…**: Mohan Prasad Kala executed a Deed of Guarantee to guarantee the repayment of amounts…

## 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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