# In the matter of State Bank of India vs.Vijaylaxmi Narayan Shenvi Prabhu

> NCLT judgment dated 2024-02-16. Citation: TCN-2024-NCLT-02548. The case involves an application filed under Section 95 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 16 Feb 2024
- **Citation:** TCN-2024-NCLT-02548
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/state-bank-of-india-vsvijaylaxmi-narayan-shenvi-prabhu-1efa8ff0

## Summary

### Background

The case involves an application filed under Section 95 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 Debtors) Rules, 2019, by State Bank of India (Financial Creditor) against Mrs. Vijaylaxmi Narayan Shenvi Prabhu (Personal Guarantor) for recovery of INR 89,89,34,410.64/-. The application seeks to initiate an insolvency resolution process against the personal guarantor due to the corporate debtor's failure to fulfill its obligations towards the financial creditor. The corporate debtor, Aditya Vidyut Appliances Ltd., had availed credit facilities from the financial creditor since 2008, which were renewed in

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## Facts

State Bank of India (SBI) filed an application under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, against Mrs. Vijaylaxmi Narayan Shenvi Prabhu, who acted as a personal guarantor for credit facilities extended to Aditya Vidyut Appliances Ltd. SBI sought to recover INR 89,89,34,410.64/- as of June 30, 2021, with accruing interest. Aditya Vidyut Appliances Ltd. had been availing credit facilities from SBI since 2008, which were renewed in 2017. Mrs. Prabhu executed a guarantee deed on May 29, 2018, and a supplemental deed on May 25, 2018, providing an irrevocable and continuing guarantee. The corporate debtor's account was classified as a non-performing asset on October 16, 2018, leading to a recall notice issued on July 30, 2019. Corporate Insolvency

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## Issues and analysis

### Issue 1: Whether the application under Section 95 of the Insolvency and Bankruptcy Code, 2016, for …

**Ratio:** The liability of a surety is co-extensive with that of the principal debtor. The

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**Reasoning:** The Tribunal relied on the Resolution Professional's report, which recommended accepting

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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, the Financial Creditor, SBI, filed an application under Section

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## Parties

- **Judges:** V.G. B…; Prabhat…
- **Appellants:** State Bank of…
- **Respondents:** Aditya Vidyut…; Vijaylaxmi…

## Timeline

- **2008-01-01 — Credit Facilities…**: Financial Creditor granted various credit…
- **2017-01-01 — Credit Facilities…**: Financial Creditor renewed the credit…

## 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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