# In the matter of State Bank of India Vs. Satyan Kasturi, CP (IB) No. 401/95/HDB/2020

> NCLT judgment dated 2022-06-20. Citation: TCN-2022-NCLT-02159. The State Bank of India (Financial Creditor) filed a petition under Section 95 of the…

- **Court:** NCLT
- **Order date:** 20 Jun 2022
- **Citation:** TCN-2022-NCLT-02159
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-satyan-kasturi-cp-8d130d36

## Summary

### Background

The State Bank of India (Financial Creditor) filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the Insolvency & 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 Shri Satyan Kasturi, the Personal Guarantor of PPS Enviro Power Private Limited. The Corporate Debtor had availed credit facilities amounting to Rs. 225.94 crores from the Financial Creditor/SBI and its associate banks. The accounts of the Corporate Debtor were classified as Non-Performing Asset (NPA) on 26.12.2015. A recall notice was issued to the Personal Guarantor on 11.10.2017, demanding payment

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## Facts

The State Bank of India (SBI), acting as the Financial Creditor, extended credit facilities amounting to Rs. 225.94 crores to PPS Enviro Power Private Limited, the Corporate Debtor. Shri Satyan Kasturi acted as the Personal Guarantor for these credit facilities. Due to defaults in repayment, the Corporate Debtor's accounts were classified as Non-Performing Asset (NPA) on 26.12.2015. SBI issued a recall notice to Shri Satyan Kasturi on 11.10.2017, demanding payment of the outstanding amounts. SBI also initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor under Section 7 of the IBC, which was admitted on 13.08.2019. Subsequently, SBI issued a demand notice to Shri Satyan Kasturi on 23.09.2020, seeking payment of the defaulted amount, but

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## Issues and analysis

### Issue 1: Whether Insolvency Resolution Process can be ordered …

**Ratio:** The liability of the personal guarantor is coextensive with that of the corporate debtor.

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**Reasoning:** The Tribunal noted that the Personal Guarantor did not contest the matter despite service

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**Interpretation:** Section 95 of the IBC allows a financial creditor to initiate insolvency

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**Application:** In this case, Shri Satyan Kasturi was the personal guarantor for the credit

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** State Bank of…
- **Respondents:** PPS Enviro Power…; Satyan Ka…

## Timeline

- **2015-12-26 — NPA Classif…**: The accounts of the Corporate Debtor were…
- **2017-10-11 — Recall N…**: A recall notice was issued to the Personal Guarantor demanding payment of outstanding…

## 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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