# In the matter of State Bank of India vs. Yarlagadda Padmavathi & Ors.

> NCLT judgment dated 2024-02-27. Citation: TCN-2024-NCLT-02376. The State Bank of India, acting as the Financial Creditor, initiated an Insolvency Resolution…

- **Court:** NCLT
- **Order date:** 27 Feb 2024
- **Citation:** TCN-2024-NCLT-02376
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vs-yarlagadda-padmavathi-ors-5d1ebe36

## Summary

### Background

The State Bank of India, acting as the Financial Creditor, initiated an Insolvency Resolution Process against Smt. Yarlagadda Padmavathi, the Personal Guarantor of M/s. YKM Entertainment and Hotels Private Limited (Corporate Debtor). The Corporate Debtor had availed various financial assistances from the Financial Creditor and its associate banks. Upon the Corporate Debtor's failure to repay the loan, the account was declared as Non-Performing Asset (NPA). The Financial Creditor then approached the Debts Recovery Tribunal, Hyderabad-II, and filed an Original Application against the Corporate Debtor and the Guarantors. Although a settlement was attempted, the Corporate Debtor and Personal Guarantors failed to adhere to the terms, leading to the current petition.

## Facts

The State Bank of India (SBI) extended financial assistance to M/s. YKM Entertainment & Hotels Private Limited. The first loan agreement was executed on 2011-08-30 for Rs.78.00 Crores, revised to Rs.113.70 Crores on 2014-07-23, and further revised to Rs.138.70 Crores on 2015-10-27. Guarantee Deeds were executed between SBI and the guarantors, including Smt. Yarlagadda Padmavathi. The Corporate Debtor defaulted on payments, leading to the account being declared an NPA on 2016-11-29. SBI filed Original Application No.767 of 2018 before the Debt Recovery Tribunal (DRT), Hyderabad-II, to recover Rs.184,82,88,871.00/-. An OTS proposal was made, and a compromise was recorded, but the Respondents defaulted again. SBI then filed Company Petition (IB)No. 206/07/HDB/2021

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 95 of the IBC is within the …

**Ratio:** The application must be filed within the period of limitation as prescribed by law. The

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**Reasoning:** The court considered the date of default by the Corporate Debtor and the date of filing

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**Interpretation:** The limitation period for filing an application under Section 95 of the IBC is

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**Application:** The court found that the present petition was filed on 2022-07-25, and the

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** State Bank of…
- **Respondents:** YKM Entertainment…; Yarlagadda…

## Timeline

- **2011-08-30 — First Loan Ag…**: The first loan agreement was executed between the Corporate Debtor and Financial Creditor…
- **2014-07-23 — Credit Agreemen…**: The credit agreement was…

## 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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