ICICI Bank Limited vs Srivasta Janaswamy

Orders pronounced, recorded vide separate sheets. In the result, the Company Petition IB/215/95/HDB/2025 is admitted.

The present Application has been filed by the Creditor under Section 95(1) of the Code, 2016, read with Rule 7(2) of the applicable Rules, seeking initiation of insolvency resolution process against the Personal Guarantor, namely Mr. Srivasta Janaswamy, in respect of the Corporate Debtor, M/s. CJ Enterprises (India) Private Limited.

It is stated that, the Corporate Debtor was initially formed as a partnership firm under the name M/s. CJ Enterprises and was later converted into a private limited company, namely M/s. CJ Enterprises (India) Private Limited (CIN: U51310TG2020PTC146031), which is engaged in the wholesale business of textiles, clothing and footwear.

It is submitted that, the Corporate Debtor has approached the Financial Creditor for availing financial assistance, pursuant to which the Financial Creditor sanctioned a working capital facility of Rs. 5,00,00,000/- (Rupees Five Crores only) vide Credit Arrangement Letter dated 13.02.2020.

The aforesaid facility^{11.Cash Credit/WCDL Account No. 630505034491, sanctioned limit of Rs. 8,50,00,000/-, outstanding Rs.} was renewed and enhanced from time to time and was subsequently increased to Rs. 8,50,00,000/- (Rupees Eight Crores Fifty Lakhs only) vide Renewal Credit Arrangement Letters dated 22.06.2022 and 19.06.2023, read with Facility Agreement dated 27.06.2022.

In respect of the said credit facilities availed by the CD, the Respondent had executed irrevocable and unconditional deeds of guarantee in favour of the Financial Creditor on 27.06.2022 and 23.06.2023, to secure the credit facilities extended to the CD, thereby undertaking to repay the outstanding dues in the event of default by the Corporate Debtor.

Subsequently, after availing the aforesaid credit facilities, the CD had failed to adhere to the terms and conditions stipulated in the loan agreement and defaulted in the repayment of the loan amount as agreed. As a result, the

8,86,11,375.69 as on 01.11.2025. account of the Corporate Debtor was classified as a Non-Performing Asset (NPA) on 27.07.2025.

Pursuant to the classification of the account of the Corporate Debtor as a Non-Performing Asset, the Financial Creditor issued a Loan Recall Notice dated 12.09.2025, calling upon the Corporate Debtor to repay the entire outstanding dues within the stipulated period.

Consequent upon the failure of the Corporate Debtor to repay the outstanding dues in terms of the aforesaid Loan Recall Notice, the Financial Creditor invoked the guarantees furnished by the Personal Guarantor and other guarantors by issuing Guarantee Invocation Notice dated 24.09.2025, calling upon them to discharge their obligations. However, the Personal Guarantor failed to make any payment towards the said debt of the Corporate Debtor.

Pursuant thereto, the Financial Creditor initiated proceedings under the provisions of the SARFAESI Act, 2002 and issued a Demand Notice under Section 13(2) dated 13.10.2025 to the Corporate Debtor and its guarantors, demanding payment of Rs. 8,80,82,632.69 (Rupees Eight Crore Eighty Lakh Eighty-Two Thousand Six Hundred Thirty-Two and Sixty-Nine Paise only) as on 01.10.2025.

Subsequently, on 27.10.2025, the Financial Creditor issued a Demand Notice in Form B under Rule 7(1) of the applicable Rules to the Personal Guarantor, calling upon him to repay the outstanding dues. Despite receipt of the said notice, the Personal Guarantor failed to discharge their liability.

It is also submitted that, as on 01.11.2025, a sum of Rs. 8,86,11,375.69 remains due and payable by the Corporate Debtor and the Personal Guarantor to the Financial Creditor, along with further interest accruing thereon.

It is contended by the Applicant that, despite repeated demands and statutory notices, the Personal Guarantor has failed to discharge his liability under the deeds of guarantee. It is evident that the Personal Guarantor has committed default in repayment of the debt, and is liable to be proceeded against under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).

This Adjudicating Authority, vide order dated 06.01.2026, admitted the application CP (IB) No.215/95/HDB/2025 filed by ICICI Bank Limited under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 7(2) of the Personal Guarantor Insolvency Rules, 2019, against Mr. Srivasta Janaswamy, Personal Guarantor to M/s CJ Enterprises (India) Private Limited, and appointed CA Kambhammettu Sri Vamsi, IBBI Registration No. IBBI/IPA-001/IP-P00664/2017-2018/11141, as Resolution Professional (RP) under Section 97(5) of the Code, with a direction to file a report under Section 99 of the IBC.

The RP submits the following based on examination of the application, annexures, and supporting documents:

We have heard the Ld. Counsel for the Applicant and perused the entire record.

At the outset, we shall examine the existence of debt, default in repayment, valid invocation of the guarantee deed, valid demand notice in Form B served upon the Personal Guarantor, as the present application has been filed under Section 95 of the Insolvency and Bankruptcy Code, 2016.

On perusal of the record, it is observed that the Corporate Debtor initially operated as a partnership firm and was subsequently converted into a private limited company on 18.11.2020, namely M/s. CJ Enterprises (India) Private Limited.

It is evident that, the Creditor had sanctioned working capital facilities on 14.02.2020 to the extent of Rs. 5,00,00,000/- to the erstwhile partnership firm, pursuant to which Credit Arrangement Letter and Facility documents were executed. It is also observed that the Personal Guarantor executed the guarantee agreement in respect of the said facilities, thereby securing the repayment obligations.

The said facilities were thereafter continued, renewed and enhanced by the incorporated company to Rs. 8,50,00,000/- vide Credit Arrangement Letters and Facility Agreement dated 27.06.2022. Further, the Board Resolutions of the Corporate Debtor dated 20.06.2023 and 23.09.2024 further acknowledge the enhanced credit facilities of Rs. 85 million and Rs. 89.32 million, clearly evidencing subsisting liability and acknowledgment of debt.

The material on record thus demonstrates that, the Corporate Debtor continued to avail the credit facilities even after the incorporation and that the financial arrangement remained continuous and operative. The continuity of the transactions along with the repeated acknowledgments establish the existence of a valid and subsisting financial debt.

It is further noted that, the account of the Corporate Debtor was classified as Non-Performing Asset (NPA) on 27.07.2025, which constitutes a clear event of default. In corroboration of the said default, the Creditor has placed on record the Record of Default (Form D) issued by National e-Governance Services Limited (NeSL) dated 27.10.2025, bearing Unique Debt Identifier: AAACI1195H_630505034491, which records the date of default as 02.05.2025 and authenticates the default amount of Rs. 8,66,77,918.69/-.

Additionally, the Applicant has also placed on record the Loan Recall Notice dated 12.09.2025 and the Demand Notice under Section 13(2) of the SARFAESI Act dated 13.10.2025, quantifying the outstanding dues. There is no material on record to demonstrate that the said liability has been discharged either by the Corporate Debtor or by the Personal Guarantor.

The Respondent having remained ex-parte has neither disputed the debt nor produced any proof of repayment. In such circumstances, the pleadings and documents placed by the Applicant remain uncontroverted.

Accordingly, we are of the considered view that the existence of debt and occurrence of default stand duly established.

Furthermore, on perusal of the record, it is evident that the Personal Guarantor has executed irrevocable and unconditional continuing Deeds of Guarantee dated 17.02.2020 and 27.06.2022 (the latter being digitally signed) in favour of the Creditor to secure the credit facilities extended to the Corporate Debtor.

The terms of the said guarantee clearly stipulate that the liability of the guarantor is co-extensive with that of the principal borrower and that upon default, the guarantor is liable to forthwith discharge the entire outstanding dues. The extract of the relevant clause is extracted for ready reference:

The Applicant has invoked the Guarantee deed vide a notice dated 24.09.2025, which was dispatched to the Personal Guarantor bearing Tracking ID EN447767309IN to the last known address of the Personal Guarantor. The notice is deemed to have been duly served pursuant to Clause 31 of the Guarantee Agreement dated 27.06.2022, which was digitally signed by the Personal Guarantor on 28.06.2022. Accordingly, we hold that the Deeds of Guarantee were validly executed and duly invoked by the Creditor.

It is also observed that, the Applicant has issued Demand Notice in Form B dated 27.10.2025 under Rule 7(1) of the applicable Rules to the Personal Guarantor. The material on record discloses that the said notice was dispatched under Tracking ID EN459776550IN and was returned with the remark “refused.”

In this regard, we place our reliance on the ruling of the Hon'ble Apex Court in case of Ajeet Seeds Limited Vs. K. Gopal Krishnaiah reported in (2014) 12 Supreme Court Cases 658, wherein it was held that: -

Thus, it is well settled that, the refusal to accept the notice amounts to deemed service in law. Therefore, we hold that, the statutory requirement of service of Demand Notice in Form B stands duly complied with.

Moving further, we deal with aspect of limitation. It is evident that, the date of default is 27.07.2025, being the date on which the account of the Corporate Debtor was classified as NPA. Thus, the present application having been filed on 29.12.2025, is well within the prescribed period of limitation of three years from the date of default.

Accordingly, we hold that the present application is within limitation.

I. The Company Petition vide CP (IB) No. 215/95/HDB/2025 filed under the provisions of Section 95 of the IBC is hereby admitted under the provisions of Section 100 of the Code, 2016, and the Insolvency Resolution Process is initiated against Mr. Srivasta Janaswamy, the Personal Guarantor, and a moratorium is declared in relation to all debts, which begins from the date of admission of the instant petition and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of the Code, 2016. During the moratorium period:

II. The Resolution Professional, CA Kambhammettu Sri Vamsi, bearing IBBI Registration No. IBBI/IPA 001/IPP00664/2017-18/11141, email address: [email protected], and mobile number: 9866122632, whose Authorization for Assignment (AFA) is valid and renewed as per IBBI records, is appointed. He is directed to cause a public notice to be published on behalf of the Adjudicating Authority within 7 days of passing this Order on the website of the NCLT Hyderabad Bench, inviting claims from all Creditors, within 21 days of such publication.

III. The notice shall contain the necessary information as provided under Section 102(2) of the Code. The publication of the notice shall be made in newspapers, one in English and the other in the vernacular (Telugu), which have wide circulation in the State where the Personal Guarantor and Corporate Debtor reside.

IV. The Resolution Professional shall furnish two spare copies of the notice to the Registry. One shall be placed on the NCLT website by the Registry, and the other shall be affixed in the premises of this Adjudicating Authority.

V. The Resolution Professional, in exercise of the powers conferred under Section 104, shall prepare a list of creditors within 30 days from the date of the notice.

VI. The Personal Guarantor, in consultation with the Resolution Professional, shall prepare a repayment plan containing a proposal to the creditors for restructuring his debts or affairs as provided under Section 105. This plan shall include provisions for the payment of fees to the Resolution Professional.

VII. The Resolution Professional shall submit the repayment plan along with his report on the plan to this Adjudicating Authority within a period of 21 days from the last date of submission of claims as provided under Section 106.

VIII. In case the Resolution Professional recommends that a meeting of the creditors is not required to be summoned, he shall record the reasons thereof. If the Resolution Professional is of the opinion that the meeting of creditors should be summoned, he shall specify the details as provided under Section 106(3).

IX. The date of the meeting shall not be less than fourteen days or more than 28 days from the date of submission of the Report under Sub-section (1) of Section 106 of the Code, for which at least 14 days’ notice to the creditors (as per the list prepared) shall be issued by all modes. Such notice must contain the details as provided under the provisions of Section 107 of the Code.

X. The meeting of the creditors shall be conducted in accordance with Sections 109, 110, and 111 of IBC. The Resolution Professional shall prepare a report of the meeting of the creditors on the repayment plan with all details as provided under Section 112 and submit the same to the Authority, copies of which shall be provided to the guarantor and the creditors.

XI. It is further clarified that the Resolution Professional shall perform his functions and duties in strict compliance with the Code of Conduct prescribed under Section 208 of the Code.

XII. The Petitioner is directed to communicate this order to the Resolution Professional appointed in the instant Company Petition immediately.

This CP(IB) No. 215/95/HDB/2025 filed under Section 95 of the IBC, 2016, is admitted, and the Insolvency Resolution Process is initiated against the Personal Guarantor.