Invocation of personal guarantee must strictly adhere to contractual terms; mere notice does not suffice without actual demand per terms.

ORDER

(Hearing through hybrid mode

1. This Petition u/s. 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC, 2016") r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 has been filed by State Bank of India, Stressed Assets Management Branch (“Financial Creditor”) for initiating insolvency resolution process against Mr. Raju (“Personal Guarantor”) in respect to Default Amount of Rs.3008,74,42,448/- (Rupees Three Thousand and Eight Crores Seventy-Four Lakhs Forty-Two Thousand Four Hundred and Forty- Eight only) including interest and penalties. The Date of Default, as specified in Part-III of the Petition, is 31.10.2018. The Petitioner has placed Deed of Personal Guarantee executed by the Guarantor Mr. K.S. Raju in favour of the Financial Creditor dated 25.03.2008, Modification deed modifying the Guarantee Agreement dated 10.10.2012, 30.03.2015, and 21.06.2016, Loan Agreement dated 25.03.2008, Lenders Agent Agreement dated 25.03.2008 and the Legal notice sent to the Personal Guarantor on 21.11.2018.

2. Part – I of the Petition sets out the details of the Petitioner / Financial Creditor i.e. State Bank of India. It has its registered office at State Bank Bhavan, Corporate Centre, Madame Carma Road, Mumbai-400 021 Maharashtra and is represented by its Assistant General Manager, Mrs. K. Prabha. Part-II of the petition sets out the details of the Personal Guarantor namely Mr. K.S. Raju. The address of the Respondent is stated as Miyapur Garden Plot No. 1-60/1, IDA Bollaram Road, Miyapur, Hyderabad and also Bungalow No.36, Aparna Orchids, Near NAC (HITEX) Izzath Nagar Kondapur, Hyderabad- 500084 Telangana.

3. It is stated that the Corporate Debtor, was promoted by the Government of Tamil Nadu through its investment arm Tamil Nadu Industrial Development Corporation (“TIDCO“) and Nagarjuna Fertilizers and Chemicals Ltd. for setting up and running a 5.9 MMТРА grassroot oil refinery at Cuddalore, Tamil Nadu by relocating a refinery from Woerth, Germany, for the production of fuel compliant with the prevailing Euro 2 emission standards. The Petitioner is part of the consortium of banks, led by IDBI Bank, which had agreed to finance the project. It is stated that the Corporate Debtor availed Facilities from the consortium of banks. The Respondent stood as a Personal guarantor in respect of the loans availed by Nagarajuna Oil Corporation Limited, the Corporate Debtor, from State Bank of India. The Personal Guarantor executed a Deed of Guarantee dated 25.03.2008 for Rs.3193.0 Crores (Rupees Three Thousand One Hundred and Ninety-Three Crores, in favour of State Bank of India ("Guarantee Deed"), providing an irrevocable and continuing guarantee for the repayment of the facilities availed by the Corporate Debtor.

4. It is stated that the Winding up/ Liquidation proceeding under the Section 433 Companies Act, 1956 was initiated against the Corporate Debtor. The same was transferred to NCLT. The CIRP order was passed against the Corporate Debtor on 25.07.2017. Subsequently Liquidation order was passed against the Corporate Debtor on 11.12.2018.

5. It is stated that Legal notice was issued to the Personal Guarantor on 21.11.2018 invoking the guarantee calling upon the Personal Guarantor to repay the outstanding dues along with applicable interest and other charges.

6. It is stated that Demand Notice was issued on 20.08.2020 under Rule 7(1) of the IBBI (Application to Adjudicating Authority for Insolvency Resolution Process of