# In the matter of Stressed Assets Stabilisation Fund vs. Anil Rai

> NCLT judgment dated 2024-11-20. Citation: TCN-2024-NCLT-00194. The Stressed Assets Stabilisation Fund (SASF) filed an application under Section 95(1) of the…

- **Court:** NCLT
- **Order date:** 20 Nov 2024
- **Citation:** TCN-2024-NCLT-00194
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/stressed-assets-stabilisation-fund-vs-anil-rai-3a2e0bc8

## Summary

### Background

The Stressed Assets Stabilisation Fund (SASF) filed an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the Insolvency and Bankruptcy Rules, 2019, seeking initiation of the insolvency resolution process against Anil Rai, the personal guarantor to the corporate debtor, Malvika Steel Ltd. The application was filed due to the corporate debtor's failure to repay outstanding debts, for which Anil Rai had provided a personal guarantee. The corporate debtor had availed credit facilities from IDBI between 1994 and 1999, which later became NPA. SASF, as a special purpose vehicle, acquired these stressed assets. The application seeks to initiate the Personal Insolvency Resolution Process (PIRP) against the personal guarantor.

## Facts

1. Stressed Assets Stabilisation Fund (SASF) filed an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, against Anil Rai, the personal guarantor of Malvika Steel Ltd.
2. Malvika Steel Ltd. availed credit facilities from IDBI between 1994 and 1999, which later became Non-Performing Assets (NPA).
3. SASF acquired these stressed assets as a Special Purpose Vehicle (SPV) through a Trust Deed dated 24.09.2004.
4. Anil Rai provided personal guarantees for the loans availed by Malvika Steel Ltd., executing guarantee agreements on 23.09.1994, 21.09.1996, 09.01.1998, and 18.11.1999.
5. Malvika Steel Ltd. defaulted on loan repayments, leading SASF to issue a loan recall notice on 02.07.2002.
6. SASF initiated recovery proceedings before the Debt Recovery

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## Issues and analysis

### Issue 1: Whether the application under Section 95 …

**Ratio:** The limitation period for initiating insolvency proceedings based on a recovery

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**Reasoning:** The tribunal relied on the Supreme Court's judgments in Tottempudi Salalith vs State Bank

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**Interpretation:** The interpretation of the limitation period involves understanding the

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**Application:** In this case, the tribunal applied the principle that the limitation period for

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## Parties

- **Judges:** Praveen…; Ashish…
- **Appellants:** Stressed Assets…
- **Respondents:** Malvika Ste…; Sh. Ani…

## Timeline

- **1994-01-01 — Loan Agre…**: Credit facilities were extended to Malvika…
- **2002-07-02 — NPA Decla…**: The lender (IDBI) declared the loan account of Malvika Steel Ltd. as a Non-Performing…

## 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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