Insolvency Plea u/s 95 Against Guarantor Admitted as Company Failed to Repay Debt and No Evidence of Payment Was Provided | NCLT

Case Details: State Bank of India v. Rahul Arunprasad Patel [2025] 171 taxmann.com 77 (NCLT-Ahd.)

Judiciary and Counsel Details

• Shammi Khan, Judicial Member & Sameer Kakar, Technical Member
• Devang Nanavati, Sr. Adv & Ms Nitu Chaturvedi, Adv for the Appellant.
• Arjun Seth, Ld. Adv., Rajiv Chawla, Advs & Sunil Kabra in Person for the Respondent.

Facts of the Case

In the instant case, the corporate debtor/principal borrower was granted credit facility by financial creditor/ applicant bank on 09.02.2016. The Respondent/personal guarantor had executed guarantee agreement in favor of financial creditor for the said credit facility.

However, the corporate debtor failed to maintain financial discipline due to which loan became irregular and corporate debtor was classified as NPA. Thereafter, on 02.06.2018, the financial creditor invoked Personal Guarantee.

Thereafter, a notice dated 20.10.2020 in Form B under Rule 7(2) of the Insolvency and Bankruptcy Rules was issued by financial creditor to the respondent. It was noted that since respondent failed to repay outstanding debt to financial creditor, the financial creditor filed an instant petition under section 95 of the IBC against respondent on 29.04.2021, i.e. within the limitation period.

Further, the Instant Tribunal appointed RP under section 97(5) of the Act and after examining all the details, he submitted report under section 99(1) of the Act, recommending for admission of the instant application under section 100 of the Act against the respondent.

NCLT Held

The NCLT held that RP’s report stated that no evidence was placed before him by the Respondent having paid the amount demanded by financial creditor and as such the entire amount demanded was unserviced as on the date of the order. In view of the foregoing, the instant petition was to be admitted.