# 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-03509. 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-03509
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/stressed-asset-stabilization-fund-vs-rajendra-p-tummala-cp-a25e7e1c

## 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 Industrial Development Bank of India (IDBI) had granted term loan facilities to Torus India Ltd., and Mr. Tummala had executed personal guarantees in favor of IDBI Bank for these loans. Subsequently, IDBI transferred these facilities to Stressed Assets Stabilization Fund (SASF). The corporate debtor defaulted on its dues, leading SASF to issue a

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## Facts

Kinnera Steel Ltd. (later known as Torus India Ltd.) obtained term loan facilities from Industrial Development Bank of India (IDBI) amounting to Rs.480 lakh on 1997-09-03 and an additional Rs.226 lakh on 2001-10-19. Mr. Rajendra P Tummala provided personal guarantees to IDBI Bank for these loans. The Central Government constituted Stressed Assets Stabilization Fund (SASF) via a Trust Deed dated 2004-09-24 to acquire stressed assets from IDBI. IDBI transferred the loan facilities granted to Torus India Ltd. to SASF on 2004-09-30, along with the underlying security interest. Torus India Ltd. defaulted on its dues. SASF issued a demand notice to Mr. Tummala on 2020-03-03, seeking payment of Rs.242,30,76,960/-, but Mr. Tummala failed to comply. SASF then filed a petition

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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 (IBC), 2016, allows a creditor to

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**Reasoning:** The court considered that Mr. Rajendra P Tummala had provided personal guarantees for the

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**Interpretation:** Section 95 of the IBC is interpreted to provide a mechanism for creditors to

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

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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 lakh…
- **2001-10-19 — Additional Term Loan…**: IDBI granted an additional term loan…

## 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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