State Bank Of India vs Sri Radha Ballav Singhania

Comp. App. (AT) (Ins) No. 1731 of 2024 IN THE MATTER OF: State Bank of India ...Appellant

Versus

Sri Gobardhan Singhania ...Respondent

Present: For Appellant : Ms. Zeba Khan, Adv. For Respondent : Mr. Shaunak Mitra, Patita Paban Bishwal, Shruti Singhania, Sahini Dey, Adv.

And

Comp. App. (AT) (Ins) No. 1739 of 2024 IN THE MATTER OF: State Bank of India ...Appellant

Versus

Sri Radha Ballav Singhania ...Respondent

Present: For Appellant : Ms. Zeba Khan, Adv.

For Respondent : Mr. Shaunak Mitra, Patita Paban Bishwal, Shruti Singhania, Sahini Dey, Adv.

ORDER

(Virtual Mode)

Per: Justice Rakesh Kumar Jain: (Oral)

10.09.2025: This order shall dispose of two appeals, namely, CA (AT) (Ins) No. 1731 of 2024 and 1739 of 2024 by a common order because the issues involved in these appeals are common.

2. Shorn of unnecessary details, Respondents in both appeals, namely, Sri Gobardhan Singhania and Sri Radha Ballav Singhania furnished personal guarantee for the loan advanced by the State Bank of India to the borrower, namely, Technofab Manufacturing Ltd.

3. Counsel for the Appellant has submitted that the said borrower is already in liquidation. The State Bank of India (Appellant) filed an application under Section 95 of the Code against the personal guarantors after serving notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to AA for Insolvency resolution process for personal guarantors) Rules, 2019 (in short 'Rules').

4. However, the application has been dismissed by the Tribunal on the ground that the said demand notice dated 20.02.2020 was not delivered on the personal guarantors.

5. Counsel for the Appellant has submitted that the Tribunal has committed an error of law in dismissing the application filed under Section 95 of the Code even without appointment of the IRP.

6. It is submitted that before a report submitted by the RP under Section 99 of the Code, the Tribunal cannot decide the issue on merit. In support of his submission, she has relied upon a decision of the Hon'ble Supreme Court in the case of Dilip B Jiwrajka Vs. Union of India (2024) SCC 5 SC 435 and a decision of this Court in the case of Central Bank of India Vs. Deepen Arun Parekh, CA (AT) (Ins ) No. 697 of 2024 decided on 11.11.2024

7. It is contended that in the case of Central Bank of India (Supra) the issue was also in regard to the non-delivery of statutory notice under Rule 7(1) but despite that this Court has held that the Tribunal has committed an error in adjudicating upon the lis between the parties before appointment of the IRP.

8. Faced with this argument, Counsel for Respondent has submitted that the issue as to whether notice dated 20.02.2020 on printed form B, in terms of Rule 7(1), had actually been served upon the personal guarantors or not may be kept open to be decided by the Tribunal but the matter may be remanded back to await the appointment of the IRP and to await the report under Section 99 of the Code.

9. Thus, in view of the facts and circumstances, we have found that the impugned orders are patently erroneous as the same have been passed contrary to the principle of law laid down by the Hon'ble Supreme Court in the case of Dilip B Jiwrajka (Supra) and this Court in the case of Central Bank of India (Supra).

10. The impugned orders are thus set aside and the matter is remanded back to the Tribunal to proceed with the application filed under Section 95 of the Code by the State Bank of India in accordance with law.

11. It is needless to mention that the issue regarding service of notice dated 20.02.2020, under Rule 7(1), shall remain open and decided by the Tribunal while considering the application filed by the Appellant under Section 95 of the Code henceforth.

12. With these observations, the appeals are allowed. The parties shall bear their own cost.

I.As, if any, pending is/are hereby closed.

The parties are directed to appear before the Tribunal on 15th October, 2025.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Justice Md. Faiz Alam Khan] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sc/RR