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2025 Supreme(Online)(NCLT) 486
NATIONAL COMPANY LAW TRIBUNAL
Shri. Rajeev Bhardwaj, Shri. Sanjay Puri, JJ
STATE BANK OF INDIA – Appellant
Versus
SHRI MLPURI SIVA RAMAKRISHNA – Respondent
IA(I.B.C) - 2110/2024
For the Petitioner:GP Yash Vardhan
The court affirmed that a Personal Guarantor's failure to meet financial obligations justifies bankruptcy proceedings under the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 121, 123, 95, 100, 101, 125, 126, 128, 129, 130, 136, 140, 141 - Bankruptcy proceedings initiated against Personal Guarantor for Corporate Debtor due to non-payment of debts - The Financial Creditor submitted that the Personal Guarantor failed to meet obligations under Guarantee Agreements and repayment plans were rejected. (Paras 1-19)
(B) Personal Guarantor's obligations - The court emphasized the Personal Guarantor's failure to contribute funds as agreed, leading to the declaration of bankruptcy. (Paras 19-20)
(C) Role of Bankruptcy Trustee - The court appointed a Bankruptcy Trustee to manage the estate of the bankrupt and oversee the bankruptcy process. (Paras 21-30)
Facts of the case:
The Financial Creditor filed for bankruptcy proceedings against the Personal Guarantor due to significant outstanding debts amounting to Rs.6857,62,96,400.44, with previous attempts to resolve the debt failing.
Findings of Court:
The court found sufficient grounds to admit the bankruptcy petition, declaring the Personal Guarantor as bankrupt and appointing a Bankruptcy Trustee to manage the proceedings.
Issues: The main issues included the Personal Guarantor's failure to fulfill financial obligations and the legitimacy of the bankruptcy proceedings initiated by the Financial Creditor.
Ratio Decidendi: The court ruled that the Personal Guarantor's non-payment and failure to adhere to the repayment plan justified the initiation of bankruptcy proceedings, emphasizing the need for compliance with financial commitments.
Result: The Personal Guarantor is hereby ordered to be BANKRUPT.
ORDER
1. The instant Application has been filed by State Bank of India (“Applicant/FC) under Section 121 r/w Section 123 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 to initiate Bankruptcy Proceedings against Mr. Mulpuri Siva Rama Krishna, Personal Guarantor (R1) of M/s.Athena Chhattisgarh Power Limited, Corporate Debtor (R2).
2. It is submitted that the Corporate Debtor is engaged in the business of Engineering, Procurement and Construction etc. The Financial Creditor granted the Corporate Debtor a term loan facility executed vide common term loan agreement dated 30.03.2011 aggregating to Rs.2150,00,00,000 (Rupees Two Thousand One Hundred and Fifty Crore only),. On 25th November, 2011 the Financial Creditor novated its commitment of Rs.100,00,00,000 and the commitment was reduced to Rs.2050,00,00,000 (Rupees Two Thousand and Fifty Crore only) (“Rupee Facility”). The Common Rupee Loan Agreement was later amended by the First Amendment Agreement to the Common Rupee Loan Agreements dated 30.03.2011, 31.03.2015 and the Second Amendment Agreement to the Common Rupee Loan Agreements dated 30.03.2011, 01.09.2016 (Collectively referred to as “Loan Agreement - 1”).
3. It is further submitted that the Personal Guarantor along with other sponsors have executed sponsors support & undertakings dated 30.03.2011 & 31.03.2015 jointly and severally agreeing and undertaking to contribute adequate funds to the Corporate Debtor to meet the entire cost overrun incurred by the Project either by way of subscription to the shares of the Corporate Debtor or by infusing adequate funds into the Corporate Debtor. The outstanding amount in default as on 30.09.2024 is Rs.6857,62,96,400.44 (Rupees Six Thousand Eight Hundred and Fifty Seven Crores Sixty Two Lakh Ninety Six Thousand Four Hundred and Forty Fourt paise only) as on 30.09.2024.
4. It is submitted that the details relating to the amounts disbursed by each of the Associate bank (in addition to the amounts disbursed by SBI) have been set out separately in this Application. The details of the amounts disbursed by the Associate Banks is provided in the table below:
| Sr No | Facility Agreement | Total amount sanctioned by the consortium lenders (In INR Crores) | Total amount sanctioned by the Financial Creditor (in INR Crores) | Amount disbursed |
| 1 | Loan Agreement | Rupee Facility: 4650 | 1. SBI: 1750 2. SBoP:150 3. SBT: 150 4. SBBJ:100 Total: 2150 | 1. SBI: 1569,31,17,239 2. SBoP: 150,00,00,000 3. SBT: 150,00,00,000 4. SBBJ: 100,00,00,000 |
| 2 | Guarantee Facility Agreement | BG Facility:600 | 12 | |
| 3 | Loan Agreement-2 | Cost Overrun Rupee Facility: 1682 | 1. SBI: 600 2. SBoP:54.26 3. SBT: 54.26 4. SBBJ: 36.16 Total: 744.68 | 1. SBI:293,37,98,746 2. SBoP: 18,01,55,400 3. SBT: 30,02,21,931 4. SBBJ: 15,48,27,012 |
| 4 | Guarantee Facility Agreement-2 | Cost Overrun Bank Guarantee Facility: 413.60 | 150 | |
| 5 | Sub-Debt Facility III Agreement | Additional SBI Facility: 300.00 | 300 | 299.24 |
5. The Rupee Facility was disbursed vide multiple tranches on 26.09.2011 & 29.01.2016 being the first & last tranche of the principal amount under the Rupee Facility disbursed. Security documents, including the Director’s Declaration, Memorandum of Entry was executed, Deed of Hypothecation, Share Pledge Agreement were executed pursuant to the Loan Agreement – 1 in 2014 and 2015.
6. The Financial Creditor further granted the Corporate Debtor a cost overrun term loan facility aggregating Rs.744,68,00,000 (Rupees Seven Hundred and Fifty Crore and Sixty-Eight Lakh Only) (“Cost Overrun Rupee Facility”), vide a common term loan agreement dated 31.03.2015, amended by the First Amendment Agreement to the Common Rupee Loan Agreements dated 30.03.2015, 01.09.2016 (collectively referred to as “Loan Agreement-2”).
7. The Cost Overrun Rupee Facility was disbursed in multiple tranches on 30.01.2016 & 27.10.2017 being the first & last tranche of t
