NCLT Allowed to Initiate Insolvency Proceedings Against Sujana Chowdary
Hyderabad: The Hyderabad bench of the National Company Law Tribunal (NCLT) has given the green signal to initiate insolvency proceedings against BJP leader and former MP Sujana Chowdary. It issued an order to this effect on Thursday and appointed a bankruptcy resolution professional (resolution professional).
The NCLT bench also barred Sujana Chowdary from alienating, transferring or selling his personal properties till the insolvency proceedings were completed.
Sujana Chowdary had given a personal guarantee in a `500-crore loan that Splendid Metal Products Limited took from the State Bank of India. On default, the SBI filed a petition in the NCLT in 2021 to start personal bankruptcy and insolvency proceedings against Sujana Chowdary.
The SBI asked for the valuation of the properties of Chowdary to be taken up, auction them and repay the loans.
The NCLT bench comprising judicial member Rajiv Bharadwaj and technical member Sanjay Puri issued orders on this petition. Advocate V.V.S.N. Raju presented arguments on behalf of the petitioner.
Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, says that when any company or individual defaults on a loan to a lender, the person who has given personal guarantee is liable. In the past, the Supreme Court had commented on this matter during several judgments. Chowdary’s counsel argued that the liability of the guarantor to a corporate debtor was different.
On completion of the arguments by both sides, and examining the report given by the Interim Resolution Process (IRP), the NCLT bench allowed the commencement of personal bankruptcy proceedings against Chowdary.
According to this, a liquidator will be appointed to start the bankruptcy process, who will examine Chowdary's debts and assets and suggest a solution according to the ratio to be given to the creditors.
