# In the matter of State Bank of India Vs. Shagufta Khan, CP (IB) No. 947(PB)/2020

> NCLT judgment dated 2022-04-03. Citation: TCN-2022-NCLT-03417. The State Bank of India filed an application under Section 95 read with Rule 7(2) of the IBC,…

- **Court:** NCLT
- **Order date:** 3 Apr 2022
- **Citation:** TCN-2022-NCLT-03417
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-shagufta-khan-cp-7523e28f

## Summary

### Background

The State Bank of India filed an application under Section 95 read with Rule 7(2) of the IBC, seeking to initiate the Insolvency Resolution Process against Shagufta Khan, the Respondent/Guarantor, who stood as a personal guarantor for a loan facility availed by the Corporate Debtor, M/s Multiwal Pulp and Board Mills Private Limited. The Resolution Plan against the Corporate Debtor has already been approved by the CoC. The Respondent was ex-parte in the matter, as recorded in the order dated 01.02.2022.

## Facts

The State Bank of India (SBI) filed an application under Section 95 of the Insolvency and Bankruptcy Code (IBC) against Shagufta Khan, who acted as a personal guarantor for the loan availed by M/s Multiwal Pulp & Board Mills Private Limited. The corporate debtor failed to maintain financial discipline, leading SBI to issue a legal demand notice on 07.08.2015 to the corporate debtor and guarantors, including Shagufta Khan, to repay the outstanding amount. Despite this notice, the respondent failed to liquidate the outstanding amount. SBI then filed an Original Application against the corporate debtor and guarantors before the Debt Recovery Tribunal (DRT-II), New Delhi, which remains pending. In 2017, the corporate debtor and guarantors approached SBI for a

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## Issues and analysis

### Issue 1: Whether the application filed by State Bank of India under Section 95 of the Insolvency and …

**Ratio:** Section 95 of the Insolvency and Bankruptcy Code, 2016, allows a creditor to initiate

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**Reasoning:** The court considered the report submitted by the Resolution Professional, which

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**Interpretation:** Section 95 provides a mechanism for creditors to recover debts from personal

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**Application:** In this case, Shagufta Khan acted as a personal guarantor for the loan availed

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## Parties

- **Judges:** DHARMINDER…; AVINASH K.…
- **Appellants:** State Bank of…
- **Respondents:** M/s. Multiwal…; Shagufta…

## Timeline

- **2015-08-07 — Legal Demand…**: SBI sent a Legal Demand Notice to the Corporate Debtor and the Guarantors including Ms.…
- **2017-01-01 — Settlement…**: In the year 2017, the Corporate Debtor and the Guarantor i.e. Shagufta Khan along with…

## 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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