# In the matter of State Bank of India Vs. Rajya Lakshmi, CP (IB)/123/2022

> NCLT judgment dated 2022-06-21. Citation: TCN-2022-NCLT-02111. The State Bank of India filed a petition under Section 95 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 21 Jun 2022
- **Citation:** TCN-2022-NCLT-02111
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-rajya-lakshmi-cp-99a964c1

## Summary

### Background

The State Bank of India filed a petition 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 Debtor) Rules, 2019, seeking initiation of the Insolvency Resolution Process against Smt. M Rajya Lakshmi, the Personal Guarantor of Chadalavada Infratech Ltd (Corporate Debtor). The bank had granted credit facilities to the Corporate Debtor, for which the Personal Guarantor stood as guarantor for Rs. 7.00 Crores vide guarantee agreement dated 15.02.2006. The outstanding debt as of 15.04.2011 was Rs. 167,56,23,293.24, with a total default amount of Rs. 250,90,45,531.03. The bank initiated actions under

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## Facts

State Bank of India (SBI) extended credit facilities to Chadalavada Infratech Ltd, with M Rajya Lakshmi acting as the personal guarantor for a sum of Rs. 7.00 Crores based on a guarantee agreement dated 15.02.2006. The credit limits were subsequently enhanced, and M Rajya Lakshmi executed supplemental deeds of guarantee. As of 15.04.2011, the outstanding debt amounted to Rs. 167,56,23,293.24, and the total default was Rs. 250,90,45,531.03. SBI initiated actions under the SARFAESI Act, issuing a demand notice on 26.09.2017, and also filed an application under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993. SBI also initiated Corporate Insolvency Resolution Process (CIRP) against Chadalavada Infratech Ltd under Section 7 of the IBC, which was admitted on

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## Issues and analysis

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

**Ratio:** Section 95 of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the

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

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**Interpretation:** Section 100 of the IBC allows for the admission of an application for

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**Application:** Given that the Personal Guarantor did not contest the petition despite service

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## Parties

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

## Timeline

- **2006-02-15 — Deed of Gua…**: Guarantee agreement executed by the…
- **2011-04-15 — Non-Performing Account…**: Outstanding debt was…

## 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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