# In the matter of State Bank of India Vs. T V Subbaiah, CP (IB)/117/2022

> NCLT judgment dated 2022-06-21. Citation: TCN-2022-NCLT-02123. 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-02123
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-t-v-subbaiah-cp-7120b983

## Summary

### Background

The State Bank of India filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Insolvency Resolution Process against Mr. T V Subbaiah, the personal guarantor of Chadalavada Infratech Ltd (Corporate Debtor). The bank had granted credit facilities to the Corporate Debtor, for which Mr. Subbaiah stood as a guarantor for Rs. 7.00 Crores via a guarantee agreement dated 2006-02-15. The credit limits were enhanced/modified, and the personal guarantor executed supplemental deeds of guarantee and joined the restructuring package agreement. The outstanding debt as of the Non-Performing Account date (2011-04-15) was Rs. 167,56,23,293.24, and the total amount in default was Rs. 250,90,45,531.03.

## Facts

State Bank of India (Petitioner Bank) granted credit facilities to Chadalavada Infratech Ltd (Corporate Debtor), with Mr. T V Subbaiah acting as the personal guarantor. The guarantee agreement was initially for Rs. 7.00 Crores, dated 2006-02-15. The credit limits were subsequently enhanced/modified, leading to supplemental deeds of guarantee. As of 2011-04-15, the outstanding debt was Rs. 167,56,23,293.24, with a total default amount of Rs. 250,90,45,531.03. The Petitioner Bank initiated actions under SARFAESI Act, 2002, and filed an application under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993. The Corporate Insolvency Resolution Process against the Corporate Debtor was admitted on 2021-09-23. A demand notice was issued to the Personal Guarantor 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 allows a creditor to initiate

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**Reasoning:** The Adjudicating Authority noted that the Personal Guarantor did not contest the petition

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**Interpretation:** The Code provides a mechanism for creditors to recover debts from personal

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

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** State Bank of…
- **Respondents:** Chadalavada…; T V Sub…

## Timeline

- **2006-02-15 — Guarantee Ag…**: Guarantee agreement between State Bank of India…
- **2011-04-15 — Non-Performing Account…**: Date on which the account was classified as Non-Performing Account with an 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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