# In the matter of State Bank of India vs. Rita Parikh

> NCLT judgment dated 2024-02-22. Citation: TCN-2024-NCLT-02488. The State Bank of India, acting as the Financial Creditor, initiated a Company Petition…

- **Court:** NCLT
- **Order date:** 22 Feb 2024
- **Citation:** TCN-2024-NCLT-02488
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-rita-parikh-e6ad788f

## Summary

### Background

The State Bank of India, acting as the Financial Creditor, initiated a Company Petition (IB/122/2023) 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 commence bankruptcy proceedings against Mrs. Rita Parikh, the Personal Guarantor of the Corporate Debtor, M/s. Parikh Fabrics Private Limited. The Corporate Debtor had availed financial assistance, with Mrs. Parikh acting as a guarantor. The Corporate Debtor's account was declared NPA on 30.08.2011, and attempts to settle the accounts under OTS in 2016 were unsuccessful. The Corporate Debtor also faced liquidation proceedings initiated

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## Facts

State Bank of India (SBI) filed a petition under Section 123 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate bankruptcy proceedings against Mrs. Rita Parikh, the personal guarantor of M/s. Parikh Fabrics Private Limited, the corporate debtor. The corporate debtor availed financial assistance, and Mrs. Parikh stood as guarantor to secure the repayment. The corporate debtor defaulted on its loan obligations, leading to its account being declared a Non-Performing Asset (NPA) on 30.08.2011. An opportunity for a One-Time Settlement (OTS) was provided in 2016, but it was unsuccessful. SBI issued a demand notice under Section 13(2) of the SARFAESI Act, 2002, on 31.07.2013, and filed OA No.188/2014 before the Debts Recovery Tribunal (DRT), Hyderabad, to

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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 that a financial creditor can initiate insolvency resolution

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**Reasoning:** The court reasoned that the Corporate Debtor had defaulted on its loan obligations, and

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**Interpretation:** Section 123 of the IBC, 2016, allows a financial creditor to initiate

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**Application:** In this case, the Corporate Debtor defaulted on its loan obligations, and the

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** State Bank of…
- **Respondents:** M/s.Parikh…; Mrs.Rita…
- **Advocates:** Mr.G.P.Yash…; Ms.Siva Pra…

## Timeline

- **2011-08-30 — Account Decla…**: The account of the Corporate Debtor was…
- **2013-07-31 — Demand Notice…**: A demand notice under Section 13(2) of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 121 — Application for bankruptcy](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-121)

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