# In the matter of State Bank of India vs. Nikhil B Parikh & Ors.

> NCLT judgment dated 2024-02-22. Citation: TCN-2024-NCLT-02471. The case pertains to an application filed by State Bank of India, the Financial Creditor, under…

- **Court:** NCLT
- **Order date:** 22 Feb 2024
- **Citation:** TCN-2024-NCLT-02471
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-nikhil-b-parikh-ors-e7859728

## Summary

### Background

The case pertains to an application filed by State Bank of India, the Financial Creditor, under Section 123 of the Insolvency and Bankruptcy Code, 2016, read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019, to initiate bankruptcy proceedings against Mr. Nikhil B Parikh, the Personal Guarantor of the Corporate Debtor, M/s. Parikh Fabrics Private Limited. The Corporate Debtor had availed financial assistance from the Financial Creditor, and Mr. Parikh stood as guarantor for the repayment of the debt. The Corporate Debtor defaulted on the loan, leading to its account being declared as NPA. Despite opportunities to settle the accounts under OTS, the

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## Facts

State Bank of India (SBI), the Financial Creditor, filed a petition under Section 123 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate bankruptcy proceedings against Mr. Nikhil B Parikh, the Personal Guarantor, for M/s. Parikh Fabrics Private Limited, the Corporate Debtor. The Corporate Debtor had availed financial assistance from SBI, and Mr. Parikh stood as a guarantor for the loan. The Corporate Debtor defaulted on the repayment, leading to its account being classified as a Non-Performing Asset (NPA) on 30.08.2011. SBI provided opportunities for a One-Time Settlement (OTS) in 2016, but the Corporate Debtor failed to adhere to the terms, resulting in the cancellation of the OTS. SBI issued a demand notice under Section 13(2) of the SARFAESI Act,

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 123 of the Insolvency and …

**Ratio:** The legal principle is based on Section 123 of the Insolvency and Bankruptcy Code, 2016,

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**Reasoning:** The Tribunal reasoned that the Corporate Debtor had defaulted on its debt to the

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**Interpretation:** This involves interpreting Section 123 of the IBC and Rule 7 of the relevant

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**Application:** In this case, the Financial Creditor, SBI, demonstrated that there was a valid

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** State Bank of…
- **Respondents:** M/s.Parikh…; Nikhil B…

## Timeline

- **2011-08-30 — Account decla…**: The account of the Corporate Debtor was…
- **2013-07-31 — Demand Notice…**: Demand notice u/s 13(2) of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 123 — Application by creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-123)

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