Authority: National Company Law Tribunal, Mumbai Bench - IV (Court IV)

Order Date: 06 July 2026

Case Overview

The State Bank of India (Financial Creditor) filed an application under Section 95(1) of the Insolvency & Bankruptcy Code, 2016 through Resolution Professional Mr. Ashutosh Agarwala, seeking initiation of insolvency resolution process against Mr. Ashwin Narendra Lodha as Personal Guarantor for corporate debt owed by Topworth Pipes & Tubes Pvt. Ltd. The total debt claimed was ₹1076.34 crore as of 31 May 2021, with date of default mentioned as 01 December 2024.

The Corporate Debtor, Topworth Pipes & Tubes, had availed various credit facilities from SBI and consortium lenders since 2008. Mr. Lodha executed a Deed of Guarantee dated 30 March 2015 guaranteeing due payment of these facilities. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) on 11 December 2018 and subsequently liquidated on 12 June 2020, during which SBI recovered ₹27.40 crore from the liquidation process.

SBI issued a Demand Notice in Form B dated 21 June 2021 to the Personal Guarantor, who responded through advocate's reply dated 01 July 2021 contesting the claim. The Personal Guarantor argued that after accepting recovery in the Corporate Debtor's liquidation process, SBI was estopped from raising further demands, and claims were fully discharged.

The key legal issue was whether SBI had properly invoked the personal guarantee before filing the insolvency application. The Tribunal examined whether the recall notice dated 01 February 2016 (addressed to the Corporate Debtor but copied to the guarantor) and the statutory Form B notice dated 21 June 2021 constituted valid invocation of the guarantee under the terms of the Deed of Guarantee.

Final Outcome

The NCLT rejected SBI's application (C.P. (IB) No. 819/MB/2021) finding that the Financial Creditor failed to establish a cause of action. The Tribunal held that:

1. The recall notice dated 01 February 2016 was addressed to the Corporate Debtor and merely copied to the Respondent, without specific demand directed at the Personal Guarantor or reference to the Deed of Guarantee

2. The statutory notice in Form B dated 21 June 2021 issued under Rule 7 cannot be treated as proper invocation of guarantee, following the NCLAT precedent in State Bank of India v. Mr. Deepak Kumar Singhania [(2025) ibclaw.in 153 NCLAT]

3. Without proper invocation of the guarantee as required by the Deed of Guarantee (which specifically required written demand to the guarantor), no cause of action existed to file an application under Section 95 of the Code

The application was therefore rejected with no order as to costs.

Topics: Personal Guarantee, Insolvency Process, Debt Recovery