# In the matter of State Bank of India vs. Thota Subbarayudu

> NCLT judgment dated 2024-03-01. Citation: TCN-2024-NCLT-02255. This case involves an application filed by State Bank of India (Financial Creditor) under…

- **Court:** NCLT
- **Order date:** 1 Mar 2024
- **Citation:** TCN-2024-NCLT-02255
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-thota-subbarayudu-6d55e41c

## Summary

### Background

This case involves an application filed by State Bank of India (Financial Creditor) under Section 95(1) 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, to initiate the Insolvency Resolution Process against Mr. Thota Subbarayudu (Personal Guarantor/Respondent No.1) of M/s. Turbo Machinery Engineering Industries Limited (Corporate Debtor). The Corporate Debtor availed credit facilities of Rs. 40,36,00,000/- from the Financial Creditor. The Respondent No.1 stood as guarantor for the repayment of the loan, and Guarantee Deeds were executed between the Financial Creditor and Respondent No.1.

## Facts

State Bank of India (Financial Creditor) filed an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, to initiate the Insolvency Resolution Process against Mr. Thota Subbarayudu (Personal Guarantor/Respondent No.1) of M/s. Turbo Machinery Engineering Industries Limited (Corporate Debtor). The Corporate Debtor availed credit facilities of Rs. 40,36,00,000/- from the Financial Creditor in the form of a cash credit and non-fund based limits vide sanction letter dated 31.01.2012, which was extended vide letter dated 29.02.2012. The Respondent No.1 stood guarantor for the repayment of the loan, and Guarantee Deeds dated 02.03.2010 and 28.02.2012 were executed between the Financial Creditor and Respondent No.1. The default in payment of debt occurred

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## Issues and analysis

### Issue 1: Whether the application under Section …

**Ratio:** The limitation period for filing an application under Section 95 of IBC is three years.

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**Reasoning:** The court considered the date of default, the date of the guarantee deed, and the date of

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**Interpretation:** The commencement of the surety's liability is determined by the terms of the

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**Application:** In this case, the demand notice was issued on 26.06.2013 to the Corporate

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** State Bank of…
- **Respondents:** Turbo Machinery…; Thota Subba…
- **Advocates:** Sarvani De…; Mohammed Hayatulla…; +1 more

## Timeline

- **2012-01-31 — Sanction Lett…**: Date of the sanction letter for credit…
- **2012-02-29 — Extension of Sanction…**: Date of the letter…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 95(1) — Application by creditor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-95)

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