The initiation of corporate insolvency resolution for a personal guarantor is not feasible while arbitration proceedings are pending for the principal borrower with a favorable award.

O R D E R

1. The instant petition is filed byM/s. State Bank Of India (Financial Creditor/FC/Petitioner) under Section 95 (1) of The Insolvency and Bankruptcy Code, 2016 (IBC) r/w Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019, seeking an order for initiation of Personal Insolvency Resolution Process against Mr. Nama Seetaiah, the Personal Guarantor (PG/Respondent) of M/s. TN (DK) Expressways Limited (Corporate Debtor/CD/ Principal Borrower).

APPLICATION:

2. It is averred that the CD had availed credit facilities of Rs. 224.00 Crores (Rupees Two Hundred and Twenty- Four Crores Only) from the consortium of Banks which includes State Bank of Hyderabad, State Bank of Mysore, State Bank of Saurashtra, Bank of Maharashtra, Vijaya Bank, Andhra Bank under a Common Loan Agreement dated 11.10.2006 1, Page 27-160 of the Petition This consortium is presently led by State Bank of India.

3. It is averred that the State Bank of India acted as the lenders’ agent as well as security trustee. The FC extended an aggregate facility of Rs.190 Crores (Rupees One Hundred and Ninety Crores Only) to the CD under the Common Loan Agreement.

4. It is submitted that the Personal Guarantor herein stood as a guarantor to secure the repayment of the financial assistance availed by the CD from the FC. Accordingly, the Personal Guarantor executed a Guarantee Agreement dated 28.03.2013. 2, Page 717 of the Petition.

5. It is further submitted that the said financial facilities were revived through revival letters dated 03.10.2009, 04.01.2012, 12.02.2016, and 30.07.2018 3, Pages 169-174 of the Petition.

6. It is stated that the FC has agreed to restructure the debt granted to CD including grant of Fund Interest Term Loan 4, Hereinafter referred to as FITL of Rs 3.10 Crores out of total 5.81 Crores granted by other lenders including the merged banks of FC, vide a sanction letter dated 28.03.2013.

7. In the meantime, the CD has made an application for debt restructuring. Accordingly, the CD and Consortium Lenders executed the Master Restructuring Agreement 5,Hereinafter referred to as MRA and the same is annexed at pages 608-651 of the Petition dated 30.03.2013, and the outstanding amount was stated to be Rs.180.46 Crores 6, Page 443 of the petition.

8. According to the MRA, the CD has agreed to repay the loan commencing from 31.03.2013 till 31.03.2023 in the form of 40 quarterly instalments 7, Page 646 of the Petition, (Schedule IV, Part A) and the FITL to be paid in 16 quarterly instalments from 31.03.2014 to 31.03.2017 8, Page 647 Of the Petition (Schedule IV, Part B).

9. It is asserted that the Corporate Debtor had committed a default in repayment of loan on 31.12.2018, which had been established based on the default record submitted to the Information Utility.

10. It is averred that a legal notice 10.06.2019 was issued by the FC on their letter-head addressed to the CD and a copy of the same was marked to PG, demanding payment of Rs.113,79,59,869.00 within 10 days from the date of the notice.

11. In response to the said notice, the CD has issued letters dated 13.02.2019, 01.10.2017, 10.04.2017, 01.04.2017, 10.07.2017, 10.10.2017, 24.01.2017, 15.04.2015, and 11.06.2013 9, Pages 179-188 of the petition confirming the outstanding balance amounts.

12. It is submitted that part payments were made by CD on 18.12.2021, 16.12.2022, 31.03.2023, and 04.03.2023 10, Pages 225-259 of the petition Subsequently, the CD offered one time settlement but the same was rejected by the FC