Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 194

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Sharad Kumar Sharma, Judicial Member
Yarlagadda Padmavathi – Appellant
Versus
State Bank of India – Respondent
Company Appeal (AT) (CH) (Ins) No.154/2024 (IA Nos.408 & 410/2024)|Company Appeal (AT) (CH) (Ins) No.155/2024 (IA Nos.411 & 413/2024)|Company Appeal (AT) (CH) (Ins) No.156/2024 (IA Nos.415, 416 & 417/2024)

Advocates:
For the Appellants/Petitioners: Mr. Diwakar Maheswari, Ms. Vindhya Vasini, Ms. Pratiksha Mishra
For the Respondents: Mr. Pranava Charan

Section 95(4)(a) IBC requires only prima facie debt details in personal guarantor applications; prior admissions via guarantees, settlements, and DRT compromise satisfy it; new non-compliance plea inadmissible at appellate stage. (38 words)

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 95(1), 95(4)(a), 3(11), 3(23), 126 - Personal guarantors to corporate debtor - Application under Section 95 for initiation of insolvency resolution process - Requirement under Section 95(4)(a) to accompany application with details of debts owed by debtor to creditor(s) - Held: Provision is procedural and facilitative, intended to provide prima facie material for Adjudicating Authority to decide admission; not a substantive bar to proceedings if details furnished in prescribed Form C sufficiently enable prima facie determination of debt and default - Execution of guarantee deeds, admission of default via one-time settlement proposal and joint compromise before DRT, declaration as non-performing asset, and prior CIRP against corporate debtor constitute sufficient details satisfying Section 95(4)(a) - New plea of non-compliance not permissible for first time at appellate stage without amendment, especially when involving mixed question of fact and law. (Paras 14-26)

(B) Evidence - Admission of facts - Execution of guarantee agreements, participation in SARFAESI proceedings, one-time settlement offer, and signing of compromise decree before DRT amount to explicit admission of debt and liability by personal guarantors, constituting best evidence obviating need for further proof at admission stage. (Paras 21, 24)

Facts of the case:
Personal guarantors to loans availed by corporate debtor challenged NCLT orders admitting Section 95 applications and commencing insolvency resolution process against them. Loans enhanced multiple times, backed by guarantee deeds; default led to SARFAESI notice, DRT proceedings, one-time settlement compromise (non-complied with), CIRP against corporate debtor, demand notices to guarantors, and Section 95 applications. Subsequent bankruptcy orders passed against guarantors.

Findings of Court:
Section 95(4)(a) satisfied by particulars in applications per Form C, prior admissions, and judicial records; no merit in challenge to admission orders.

Issues: Whether Section 95 applications deficient for lacking full debt details under Section 95(4)(a), rendering admission orders invalid; permissibility of raising such plea first at appellate stage.

Ratio Decidendi: Detailed debt narration not mandatory if application provides prima facie basis via documents and history; prior admissions and procedural compliance suffice; appellate court cannot entertain new grounds requiring factual scrutiny absent trial court agitation.

Result: Appeals dismissed.

Table of Content
1. appeals against section 95 admission moot due to bankruptcy proceedings. (Para 1 , 2 , 12)
2. corporate debtor's loans and personal guarantees established with defaults. (Para 3 , 4 , 5)
3. ots proposal and compromise admit debt and liability. (Para 6 , 7 , 8 , 9)
4. cirp initiated against corporate debtor; section 95 against guarantors. (Para 10 , 11)
5. appellant argues non-compliance with section 95(4)(a) debt details. (Para 13 , 14 , 15)
6. personal guarantors qualify as debtors under guarantee obligations. (Para 16 , 21)
7. section 95(4)(a) is procedural, not mandatory for admission. (Para 17 , 18 , 19 , 20)
8. admissions in compromise satisfy section 95(4)(a) requirements. (Para 22 , 23 , 24)
9. new grounds on section 95(4)(a) inadmissible at appellate stage. (Para 25 , 26)
10. appeals dismissed; no merit in section 95(4)(a) challenge. (Para 27)

JUDGMENT

(Hybrid Mode)

Per: Justice Sharad Kumar Sharma, Member (Judicial)

These are a set of three Company Appeals as against the order of admission of the applications filed under Section 95 of I & B Code against the respective Personal Guarantors/Appellants herein and commencement of Insolvency Resolution Process against them. As of now under the changed set of circumstances, the Appeal proceedings would amount to beating around of the dead wood, owing to the fact that, as against the present Appellants, the bankruptcy proceedings as contemplated under Section 126 of the I & B Code, have already been directed to be commenced, and the order of bankruptcy is already under challenge before this Appellate Tribunal.

2. The Appellants are personal guarantors to the loan facilities extended by the financial creditor (FC), State Bank of India, the Respondent-1 herein, to the Corporate Debtor (CD), M/s YKM Entertainment & Hotels Private Limited, under 3 sets of loan agreements and Guarantee Deeds executed by the personal guarantors.

3. Before we embark upon to deal with the arguments that has been extended by the Learned Counsel for the Appellant, as of today, a few precise facts are required to be referred herein.

3. The records reveal that the Corporate Debtor had availed financial assistance from the aforesaid Financial Creditor and its associate banks, i.e., State Bank of Hyderabad, i.e., erstwhile State Bank of Patiala, erstwhile State Bank of Mysore, erstwhile State Bank of Travancore and erstwhile State Bank of Bikaner and Jaipur. Later on, these banks stood merged with the bank of Respondent No.1. Therefore, Respondent No.2, after the merger of other banks, would be taken to be the sole financial creditor.

4. The loan agreement between the Corporate Debtor and the Financial Creditor was executed on 30.08.2011 for the extension of the term loan of Rs.78 crores. On the same date, the Guarantee Agreement was also executed by the 3 Appellants herein/the personal guarantors, for the purpose to support the execution of the loan agreement. Besides, a Hypothecation Agreement of goods and assets was also executed. The said financial assistance of Rs.78 crores was revised upwards on 23.07.2014 to Rs.113.70 crores, and a revised Guarantee Deed was executed on 23.07.2014, along with the corresponding Hypothecation Deed of goods and assets. In continuation of the two Loan Agreements of 30.08.2011, 23.07.2014, the loan was further revised upward to Rs. 130.78 crore, and a third loan agreement was signed on 27.10.2015 between the CD and the FC. Once again, this enhanced financial assistance of Rs.130.78 crores were backed by an execution of a fresh Guarantee Agreement of 27.10.2015, as well as the Hypothecation Agreement of the goods and assets on the same date, to secure the loan facility to the Corporate Debtor. Admittedly the Appellants to respective Appeals stood as personal guarantors in all three agreements of 30.08.2011, 23.07.2014 & 27.10.2015.

5. It is not in dispute that the Corporate Debtor committed a default in paying the loan amount fallen due to be paid under the three agreeme

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