# In the matter of State Bank of India Vs. Ms. K Suresh Reddy, CP (IB)/130/2022

> NCLT judgment dated 2022-09-21. Citation: TCN-2022-NCLT-00973. The State Bank of India filed a petition under Section 95 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 21 Sept 2022
- **Citation:** TCN-2022-NCLT-00973
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-ms-k-suresh-reddy-cp-1d807d0b

## Summary

### Background

The State Bank of India filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Insolvency Resolution Process against Shri. K Suresh Reddy, the Personal Guarantor of M/s. Chadalavada Infratech Ltd (Corporate Debtor). The Petitioner Bank had granted various credit facilities to the Corporate Debtor, for which the Personal Guarantor stood as a guarantor for Rs. 281.23 Crores. A restructuring package agreement was dated 03.02.2016, and a deed of guarantee was dated 08.02.2016. The outstanding debt as of the Non-Performing Account date 15.04.2011 was Rs. 167,56,23,293.24, and the total amount in default was Rs. 250,90,45,531.03. The Petitioner Bank initiated actions under SARFAESI Act, 2002 and Recovery of Debts and

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## Facts

The State Bank of India (Petitioner) extended credit facilities to Chadalavada Infratech Ltd (Corporate Debtor), with Shri. K Suresh Reddy acting as the Personal Guarantor. The guarantee was for an amount of Rs. 281.23 Crores, formalized through a restructuring package agreement dated 03.02.2016 and a deed of guarantee dated 08.02.2016. The outstanding debt, as of 15.04.2011, was Rs. 167,56,23,293.24, with the total default amounting to Rs. 250,90,45,531.03. The Petitioner Bank initiated actions under the SARFAESI Act, 2002, and the Recovery of Debts and Bankruptcy Act, 1993. A demand notice was issued to Shri. K Suresh Reddy on 21.10.2021, demanding payment of the default amount. The Corporate Insolvency Resolution Process against Chadalavada Infratech Ltd was

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## Issues and analysis

### Issue 1: Whether an Insolvency Resolution Process can be ordered against the Personal Guarantor under …

**Ratio:** Section 100 of the Insolvency and Bankruptcy Code, 2016 allows for the initiation of the

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**Reasoning:** The Adjudicating Authority considered the report of the Resolution Professional, which

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**Interpretation:** Section 95 read with Section 100 of the IBC, 2016 provides the legal basis for

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**Application:** Given that the Personal Guarantor failed to repay the debt, did not respond to

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** State Bank of…
- **Respondents:** Chadalavada…; K. Suresh…

## Timeline

- **2011-04-15 — Non-Performing Account…**: The account was classified as a Non-Performing Asset (NPA) on this date, with an…
- **2016-02-03 — Restructuring Package…**: A restructuring package agreement was executed between the Petitioner Bank and the…

## 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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