# In the matter of State Bank of India vs. Om Prakash Sharma

> NCLT judgment dated 2024-10-16. Citation: TCN-2024-NCLT-00413. The State Bank of India ('SBI'/'Bank') filed an application to initiate the Insolvency…

- **Court:** NCLT
- **Order date:** 16 Oct 2024
- **Citation:** TCN-2024-NCLT-00413
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-om-prakash-sharma-04e4515e

## Summary

### Background

The State Bank of India ('SBI'/'Bank') filed an application to initiate the Insolvency Resolution Process against Mr. Om Prakash Sharma ('Personal Guarantor'/'Respondent') under Section 95 of the Insolvency and Bankruptcy Code, 2016 ('IBC'/'Code') 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. The Personal Guarantor had executed a personal guarantee to secure the repayment of financial assistance availed by M/s Vimladevi Agro Tech Ltd. ('Corporate Debtor'). The Corporate Debtor defaulted in repayment, leading to the invocation of the personal guarantee.

## Facts

State Bank of India (SBI) filed an application to initiate Insolvency Resolution Process against Om Prakash Sharma, the personal guarantor, under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016. Om Prakash Sharma had provided a personal guarantee for loans availed by M/s Vimladevi Agro Tech Ltd. (Corporate Debtor). In 2010, the Corporate Debtor, through Shri Chandra Mohan Singhal, availed credit facilities aggregating to Rs. 5,30,00,000/-. These facilities were secured by primary and collateral securities, including equitable mortgage of properties. The Corporate Debtor also executed an Agreement of Loan cum Hypothecation. Subsequently, additional credit facilities were availed, increasing the total loan amount. The Corporate Debtor failed to maintain

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## Issues and analysis

### Issue 1: Whether the application filed by State Bank of India under Section 95 of the IBC for initiating …

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

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**Reasoning:** The court observed that the Personal Guarantor defaulted in payment of dues within the

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**Interpretation:** Section 95 of the IBC provides a mechanism for creditors to recover their dues

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**Application:** The court applied Section 95 of the IBC to the facts of the case, noting that

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## Parties

- **Judges:** Deep Chandr…; Velamur G Venkata…
- **Appellants:** State Bank of…
- **Respondents:** M/s Vimladevi…; Om Prakash…
- **Advocates:** Shivangshu…; Akanksha…; +1 more

## Timeline

- **2010-08-21 — Sanction of Credit…**: Bank sanctioned credit facilities of Rs. 5,30,00,000/- to the Corporate Debtor vide…
- **2010-08-31 — Guarantee Ag…**: Guarantee agreement executed between…

## 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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