# In the matter of Union Bank of India vs. N. Sharat

> NCLT judgment dated 2024-11-28. Citation: TCN-2024-NCLT-00128. Union Bank of India, acting as the Financial Creditor, filed a petition under Section 95(1) of…

- **Court:** NCLT
- **Order date:** 28 Nov 2024
- **Citation:** TCN-2024-NCLT-00128
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/union-bank-of-india-vs-n-sharat-a3e8b077

## Summary

### Background

Union Bank of India, acting as the Financial Creditor, filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, read with the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantor to Corporate Debtor) Rules, 2019, seeking initiation of the Insolvency Resolution Process against Mr. N Sharat, the Personal Guarantor of M/s. Thexa Pharma Private Limited (Corporate Debtor). The Corporate Debtor had approached the Financial Creditor for term loans and working capital. The Corporate Debtor defaulted on repayments, leading to the account being classified as NPA. The Financial Creditor issued a demand notice to the Personal Guarantor, who failed to pay the outstanding amount. The

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## Facts

Union Bank of India (Financial Creditor) extended loans to M/s. Thexa Pharma Private Limited (Corporate Debtor) for setting up a pellet manufacturing plant and for working capital. Mr. N Sharat acted as the Personal Guarantor for the Corporate Debtor. The Corporate Debtor defaulted on the loan repayments, leading to the account being classified as NPA on 28.02.2018. The Financial Creditor issued a demand notice dated 12.08.2021 to the Personal Guarantor, demanding payment of Rs. 50,71,65,556.58. The Personal Guarantor allegedly did not pay the outstanding amount. The Financial Creditor filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Insolvency Resolution Process against the Personal Guarantor. The Personal

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## Issues and analysis

### Issue 1: Whether an application under Section 95 of Insolvency and Bankruptcy Code, 2016 can be rejected …

**Ratio:** Service of demand notice is a 'sine qua non' for initiating action against the Guarantor

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**Reasoning:** The Tribunal reasoned that the creditor failed to provide proof of service of the demand

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**Interpretation:** Section 95(4) of the IBC mandates that an application for initiating insolvency

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**Application:** In this case, the creditor contended that the Demand Notice was sent to the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** Union Bank of…
- **Respondents:** Thexa Pharma Pvt…; N Sha…

## Timeline

- **2015-05-02 — Board Reso…**: Board of Directors of the Corporate Debtor passed a resolution to take loans and executed…
- **2018-02-28 — Account Classified as…**: The accounts were classified as NPA as the Corporate Debtor failed to service interest…

## 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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