The invocation of a personal guarantee is a prerequisite for initiating insolvency resolution proceedings against the guarantor under the IBC.

ORDER

1. This Company petition is filed by the State Bank of India (herein after referred as “Financial Creditor”) under Section 95(1) of ‘The Insolvency and Bankruptcy Code, 2016’ (hereinafter referred to as ‘IBC’) read with Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 (hereinafter referred to as “Personal Guarantors Insolvency Rules, 2019), seeking to initiate Insolvency Resolution Process against the Respondent/Smt. Lata Devi Agarwal (herein after referred as ‘Personal Guarantor’), of the ‘M/s. Good Health Agro Tech Private Limited’ (hereinafter referred to as ‘Corporate Debtor’) for a total outstanding amount of Rs.3,72,71,89,801/-.

2. The brief averments of the Petitioner are:

2.1. It is averred that the Corporate Debtor sought fund-based and non- fund-based credit facilities totaling Rs.42.45 Crores from the Financial Creditor, which was sanctioned via a letter dated07.01.2012. The Corporate Debtor owes a total Rs.372.71 Crores as of 31.05.2024, comprising of Rs.144.28 Crores in principal and Rs.228.43 Crores in interest, with further interest at 16.25% p.a. from 19.06.2014 until full recovery, as per the Recovery Certificate dated09.02.2023 issued by the Hon’ble DRT, Hyderabad.

2.2. It is averred that the Personal Guarantor executed an irrevocable and continuing Deed of Guarantee on 28.01.2012 to secure the credit facilities extended to the Corporate Debtor. Under the said agreement, the Guarantor agreed to pay on demand, all dues including principal, interest, and related costs, and to indemnify the Financial Creditor against any losses due to the Corporate Debtor’s default. Subsequently, the Corporate Debtor defaulted on its obligations and the loan account was declared as Non-Performing Asset (NPA) on 13.10.2013. Consequently, the Financial Creditor filed application OA.No.1578/2017 in the Hon’ble DRT, Hyderabad, which was decreed and a Recovery Certificate dated 24.01.2020, was issued against the Corporate Debtor and the Personal Guarantor jointly and severally was held liable for the outstanding debt of Rs.275,62,16,403.69/- with interest @ 16.25%.

2.3. It is averred that since the Personal Guarantor failed to repay the outstanding dues, the Financial Creditor issued a Demand Notice in Form B dated 27.05.2024 (dispatched on 30.05.2024) under the IBC, 2016, requesting compliance with the terms of the Guarantee deed. The notice was sent via registered post, with the postal receipt and tracking report annexed. Hence, this petition is filed under Section 95 of the IBC, 2016 to initiate Insolvency Resolution Process against the Personal Guarantor.

3. The Creditor relied on the following documents to prove the existence of debt and amount in default : -

a) Copy of the Sanction Letter dated 07.01.2012 issued by the Financial Creditor to the Corporate Debtor for providing the cash credit.

b) Copy of deed of guarantee dated 28.01.2012 executed between the Financial Creditor and Personal Guarantor for the credit facility provided by the Financial Creditor.

c) Copy of the Recovery certificate dated 24.01.2020 issued by the Hon’ble Debt Recovery Tribunal.

d) Copy of the Demand notice dated 27.05.2024 issued to the Personal Guarantor along with postal receipt and postal track report.

4. Pursuant to filing of this Petition, this Tribunal vide order dated 19.08.2024 appointed a Resolution Professional Mr. Murali Mohan Chevuturi, di