# In the matter of Stressed Asset Stabilization Fund Vs. Rajendra P Tummala, CP (IB) No. 93/95/AMR/2020

> NCLT judgment dated 2023-05-02. Citation: TCN-2023-NCLT-03499. The case pertains to an application filed under Section 95 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 2 May 2023
- **Citation:** TCN-2023-NCLT-03499
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/stressed-asset-stabilization-fund-vs-rajendra-p-tummala-cp-189b1a60

## Summary

### Background

The case pertains to an application filed under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, read with the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking to initiate the insolvency resolution process against Mr. Rajendra P Tummala, the personal guarantor of the corporate debtor, Torus India Ltd. The corporate debtor had availed term loan facilities from Industrial Development Bank of India (IDBI), which were later transferred to Stressed Assets Stabilization Fund (SASF). The corporate debtor defaulted on its dues, leading to the filing of this petition.

## Facts

Kinnera Steel Ltd. (later known as Torus India Ltd) obtained term loan facilities of Rs.480 lakh and Rs.226 lakh from Industrial Development Bank of India (IDBI) in 1997 and 2001, respectively. Mr. Rajendra P Tummala provided personal guarantees for these loans. IDBI transferred these facilities to Stressed Assets Stabilization Fund (SASF) in 2004. Torus India Ltd. defaulted on the loan payments. SASF issued a demand notice on 03.03.2020 to Mr. Tummala for outstanding dues of Rs.242,30,76,960/-, but he failed to discharge his obligations. Consequently, SASF filed a petition under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate insolvency proceedings against Mr. Tummala. The personal guarantor was set ex parte. The Resolution Professional

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## Issues and analysis

### Issue 1: Whether the petition filed under Section 95 of the Insolvency and Bankruptcy Code, 2016, is …

**Ratio:** Section 95 of the Insolvency and Bankruptcy Code, 2016, allows for the initiation of

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**Reasoning:** The court considered the submissions of the financial creditor's counsel and the report

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**Interpretation:** Section 95 provides a mechanism for creditors to recover their dues from

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**Application:** The court applied Section 95 to the facts of the case, noting that Mr. Rajendra

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## Parties

- **Judges:** TELAPROLU…
- **Appellants:** Stressed Assets…
- **Respondents:** Torus Ind…; Rajendra P…

## Timeline

- **1997-09-03 — Term Loan Facility…**: IDBI granted a term loan facility of Rs.480…
- **1997-09-05 — Guarantee Ag…**: Guarantee Agreements dated…

## 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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