National Company Law Appellate Tribunal
Gandluri Srinivas vs State Bank Of India on 30 March, 2026
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) (Ins) No. 167/2026
(IA Nos. 497 & 498/2026)
In the matter of:
MR. GANDLURI SRINIVAS,
H.No. 10-2-289/56, 1st Floor, Plot No. 89,
Shantinagar, Masab Tank, Hyderabad - 500 028.
(And)
D.No. t2-2-46, Gandluri Srinivas Complex,
Amba Gardens, Mehdipatnarn, Hyderabad,
Telengana.
...Appellant/Personal Guarantor
V
STATE BANK OF INDIA
SAM Branch, O/o. Stressed Assets Management
(SAM) Branch, HMWSSB Compound, Rear Block,
5th Floor, Khairatabad, Hyderbad,
Telangana - 500004. ...Respondent/Creditor
Present :
For Appellant : Mr. Kishore Balasubramanian, Advocate
For Respondent : Mr. Pranava Charan, Advocate
WITH
Company Appeal (AT) (CH) (Ins) No. 168/2026
(IA Nos. 499 & 500/2026)
In the matter of:
Smt. Gandluri Bharathi Devi,
H.No. 10-2-289/56, 1st Floor, Plot No. 89,
Shantinagar, Masab Tank, Hyderabad - 500 028.
(And)
D.No. t2-2-46, Gandluri Srinivas Complex,
Amba Gardens, Mehdipatnarn, Hyderabad,
Telengana.
... Appellant/Personal
Guarantor/Respondent No. 1
Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 1 of 13
V
STATE BANK OF INDIA
SAM Branch, O/o. Stressed Assets Management
(SAM) Branch, HMWSSB Compound, Rear Block,
5th Floor, Khairatabad, Hyderbad,
Telangana - 500004. ... Respondent No.1/Creditor/
Petitioner
M/s. GVS Infra and Industries Private Limited,
Rep. by Managing Director, Sri Gandluri Srinivas,
D.No.12-2-46, Gandluri Srinivas Complex, Amba
Gardens, Mehdipatnam, Hyderabad, Telangana
... Respondent No. 2 /Corporate
Debtor/Respondent No. 2
Present :
For Appellant : Mr. Kishore Balasubramanian, Advocate
For Respondents : Mr. Pranava Charan, Advocate for R1
ORDER
(Hybrid Mode) 30.03.2026:
Oral: Justice Ashok Bhushan (Chairperson) Heard Ld. Counsel for the Appellant and Ld. Counsel appearing for the Respondent.
2. These two appeals have been filed by Personal Guarantors of the Corporate Debtor, challenging the order dated 12.02.2026, passed by the Ld. NCLT, Hyderabad Bench-I, Hyderabad, admitting a Section 95 application filed by State Bank of India against the Appellants, the Personal Guarantors of the Corporate Debtor.
Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 2 of 13
3. Brief facts precisely to be noticed for deciding these two appeals are as follows: -
(i) The Appellant herein, gave a personal guaranty in favour of the Financial Creditor on 23.12.2009 in respect of a credit facility sanctioned to M/s. GVS Infra and Industries Private Limited for an amount of Rs.100 crores. The accounts of the Corporate Debtor was declared as Non-Performing Asset (NPA). A notice was issued under Section 13(2) by the Financial Creditor dated 31.12.2011, after declaring the account as NPA. The notice was addressed to the Corporate Debtor and the Personal Guarantors, on account of the amount having not been paid, a proceedings was initiated before the Debt Recovery Tribunal (DRT) by the Financial Creditor against the Corporate Debtor as well as against the Personal Guarantors. In which proceedings the decree was passed by the DRT on 26.02.2019 and a Recovery Certificate was issued on 19.03.2019. After the aforesaid proceedings a Section 95 application was filed against the Appellant after issuing demand notice in Form-B, being CP No.57/95/HDB/2022, which proceedings were withdrawn with a liberty to file a fresh by the Financial Creditor on account of non-service of notice. Subsequently, the financial creditor initiated the proceedings under Section 95, being CP(IB) No.33/95/HDB/2024, in proceedings notices were issued to the Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 3 of 13 Appellant. The Appellant appeared and objected to the proceedings, raising various objections to the proceedings under Section 95.
(ii) Both the appeals raising common questions of facts and law, it shall be sufficient to refer to the pleadings in Company Appeal (AT) (CH) (Ins) No.167/2026, for deciding both the Appeals. The Ld. Adjudicating Authority after hearing the parties by the order dated 12.02.2026, admitted Section 95 application, appointed a Resolution Professional and directed for submission of report under Section 99. The Resolution professional submitted a report under Section 99, recommending for admission of Section 95 application, the proceedings were heard under Section 100 and by the impugned order had been admitted, aggrieved by which the present Appeal.
4. Ld. Counsel for the Appellant, challenging the impugned order has raised four submissions in support of the Appeals.
5. The first submission raised by the Ld. Counsel for the Appellant is that guarantee of the Personal Guarantors was never invoked. Hence, the entire proceedings are vitiated in law. He further submitted that, under Rule 3 (1) (e) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (herein after referred to as Personal Guarantors Rules, 2019), unless the guarantee is invoked no proceedings under Section 95 can be initiated. Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 4 of 13
6. Secondly, it is submitted that the demand notice which was issued by the Financial Creditor was never served on the Appellant. It is submitted that, the Appellant has already indicated that he is residing at Amba Gardens address from 2009 and hence, the alleged service at Masab Tank address cannot be accepted. He further submitted that, in proceedings under Section 95 notices were sent to both the places, i.e., Amba Gardens, Hyderabad as well as Masab Tank, Hyderabad, whereas the notice sent at Amba Gardens was returned with the postal endorsement "Addressee Left" without instructions and at Masab Tank address it was accepted by one Mr. Mallesh, who was unconnected with the Appellant. He submitted that, notice have not been served, the entire proceedings are vitiated.
7. Third submission made by the Ld. Counsel for the Appellant is that the RP has sent notice on 04.04.2024 under Section 99 (2) of the IBC, which is claimed to be served on 06.04.2024. The RP in support of his submission has only filed the tracking report of the postal department, which does not indicate as to at which address the notice has been dispatched when no postal receipt was filed to show as to at which address notice was dispatched, the service of notice by RP was also not a proof and cannot be a basis for admission of Section 95 application.
8. Lastly, the Ld. Counsel for the Appellant submits that, the material with regard to service at Masab Tank was brought in the year 2024 and hence, the RP has not applied his mind to correct address of the Appellant and also committed error in not giving opportunity to the Appellant to file objection to the report, which Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 5 of 13 has vitiated the entire proceedings. The Ld. Counsel for the Appellant while elaborating his submissions submitted that, a proof regarding Amba Gardens address service was brought after the RP has submitted the report.
9. We have considered the submissions of the Ld. Counsel for the Appellant and perused the records.
10. Coming to the first submission of the Ld. Counsel for the Appellant, that the personal guaranty was never invoked, we have already noticed the proceedings before the DRT, Hyderabad, being OA No.2766/2017, the said proceedings refers to demand notice dated 31.12.2011 and subsequent to the said notice proceedings were initiated both against the corporate debtor as well as the personal guarantor. The decree was passed in the said proceedings against the corporate debtor as well as the personal guarantor on 26.02.2019. the para 10 of the order of DBT is as follows: -
"10. In the result, the present Original Application is allowed with costs, as under:-
(i) the Defendants are jointly and severally liable to pay to the Applicant Bank a sum of Rs.83,06,82,419.96ps (Rupees Eight Three Crore Six Lakh Eighty Two Thousand Four Hundred Nineteen and paise Ninety Six only) with future interest @13% p.a. simple, from the date of filing of the OA till the date of realization, less Rs.9,94,00,000/- being the sale proceeds of OA schedule-C property realised under SARFAESI Act and adjusted to loan account on 25.04.2016;
Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 6 of 13
(ii) the debt is secured by way of hypothecation/mortgage/pledge of OA schedule A, B, C and D properties and shares of D.1 company. Of which, Schedule-C property has already been disposed of by applicant bank and adjusted the sale proceeds to the loan account. Therefore, applicant bank is entitled to proceed against remaining OA schedule properties for realisation of its debt;
(iii) the Applicant Bank is also entitled to proceed against the person and properties of Defendants Nos. 2 and 3 and the properties of D.1 company towards realisation of its dues;
(iv) the Applicant Bank is entitled to the costs of the OA."
11. When the decree has been passed both against the corporate debtor and the personal guarantors by the DRT, relying on the notice issued under SARFAESI Act, the liability of the personal guarantors was very much there and it not open to the Appellant to contend that personal guarantee was never invoked against the Appellants. Unless the personal guarantee is invoked no debt is due on the personal guarantor. The issuance of decree by the DRT, which is joint and several, clearly proves the debt against the personal guarantors and the corporate debtor as well. We thus are of the view that and it is not shown before us that the decree passed by the DRT has been set aside or is not operative as on date. The debt by the DRT is staring in the face of the Appellant, it is not open for the Appellant to contend that personal guarantee was never invoked.
12. Coming to the second submission of the appellant that he was not served with the demand notice, the very initiation of proceedings is vitiated the submission Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 7 of 13 of the Appellant is that, he has been residing at Amba Gardens address of Hyderabad from the year 2009 and when notice was sent to the Amba Gardens address it has returned unserved with an endorsement of addressee left without instructions. It is submitted that, when the notice was not served under Rule 3 (g) of the Personal Guarantors Rules, 2019, the notice was required to be affixed at the premises of the Appellant, which had not been done, there is non-compliance of Rule 3. He further submitted that, as far as the notice sent to the Masab Tank address of Hyderabad, the notice is claimed to be received by one Mr. Mallesh, who is unconnected with the Appellant, notice shall not be deemed to have been served on the Appellant. The Ld. Adjudicating Authority in the impugned order has referred to both the notices sent to the Appellant. With regard to the notice sent at Amba Gardens address it is observed that the notice was returned as undelivered and with regard to the notice sent to the Masab Tank address, the notice was received by one Mr. Mallesh. It is submitted that, Mr. Mallesh being unconnected with the Appellant, notice will not be deemed as served. In this context, we need to notice clause 20 of the Guarantee Deed/copy of the deed filed by the Appellant along with the Appeal, which reads as follows: -
"20. The Guarantors agree that amount due under or in respect of the aforesaid credit facilities and hereby guaranteed shall be payable to the Bank on the Bank serving the Guarantors with a notice requiring payment of the amount and such notice shall be deemed to have been served on the Guarantors either by actual delivery thereof to the Guarantors or by despatch thereof by Registered Post or Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 8 of 13 Certificate of Posting to the Guarantors address herein given or any other address in India to which, the Guarantors may by written intimation give to the Bank or request that communication addressed to the Guarantors be despatched. Any notice despatched by the Bank by Registered Post or Certificate of Posting to the address to which it is required to be despatched under this clause shall be deemed to have been duly served on the Guarantors four days after the date of posting thereof, and shall be sufficient if signed by any officer of the Bank and in proving such service it shall be sufficient if it is established that the envelope containing such notice, communication or demand was properly addressed and put into the post office."
13. The Ld. Adjudicating Authority in the impugned order also referred to clause
20. What is noticeable from clause 20 is that the Appellant guaranteed that the dispatch of the notice by registered post or certificate of posting to the guarantor's address given or any other address in India on which guarantors may give written intimation to the Bank, the notice dispatched by the Bank shall be deemed to be served. What is relevant is that, dispatch of notice is deemed service. Even for the moment's sake the Appellant's submission is accepted that, Mr. Mallesh who accepted the notice at Masab Tank address was not related to the Appellant, the mere dispatch of the notice shall fulfil the condition in clause 20 and the guarantor cannot escape from his liability when the notice has been dispatched. Thus, when the deeming clause is mentioned in clause 20, the notice has to be treated to be served on the Appellant. The submission of the Appellant that there is violation of Rule 3 of the Personal Guarantors Rules, 2019 also does not commend us and the Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 9 of 13 Rule 3 has to be read in conjunction with clause 20 of the Guaranty Deed and both has to be read in a manner as to give effect to the requirement of the rule as well as the Guarantee Deed. Present is the case where notice is deemed to be served at Masab Tank address, we are of the view that, no violation of Rule 3 can be found as alleged by the Appellant.
14. Now coming to the third submission that RP has sent the notice on 04.04.2024, which was deemed to be served on 06.04.2024 and RP has filed only the tracking report of the postal department which does not indicate as to which address the notice was sent. The copy of the RP's letter dated 04.04.2024 has been brought by the Appellant in page 152 of the appeal paper book, which reads as follows: -
"Dear Sir, I, Kurapati Singarayya Chowdary have been appointed as Resolution Professional in the matter Personal Guarantor Mr. Gandluri Srinivas to the Corporate Debtor M/s GVS Infra & Industries Private Limited, the copy of the order is enclosed herewith for your reference.
As per Section 99(2) of IBC, 2016:
(2) Where the application has been filed under section 95, the resolution professional may require the debtor (o prove repayment of the debt claimed as unpaid by the creditor by furnishing -
(a) evidence of electronic transfer of the unpaid amount from the bank account of the debtor.
Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 10 of 13
(b) evidence of encashment of a cheque issued by the debtor; or
(c) a signed acknowledgment by the creditor accepting receipt of dues.
Demand notice has been sent to you by State Bank of India dated 21.05.2023 demanding an amount of Rs. 382,25,52,075.99/- as on 31.05.2023.
Therefore, you are requested to provide evidence of payment, if any Lo State Bank of India on account of the M/s GVS Infra & Industries Private Limited by furnishing your evidence as detailed above. If 1 do not receive any response from you by 10-04-2024 it will be constructed that no repayment has been made to State Bank of India after the date of Demand Notice dated 21.06.2023 Please consider this as urgent.
Thanking you, Your faithfully,"
15. The letter was addressed to the Appellant at Masab Tank, Hyderabad address, which is on the very first page of the letter and the tracking report of the postal department is with respect to the said letter, from the letter as well as the tracking report, it is clear that the letter was dispatched to the Appellant at Masab Tank address and the submission of the Appellant that the tracking report does not mention as to which address the letter is addressed cannot be accepted. Letter notice was sent at Masab Tank address and hence, the tracking report by the postal Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 11 of 13 department has to be read along with the notice. Hence, RP has sent the notice and served on the correct address of the Appellant at Masab Tank, Hyderabad.
16. Now coming to the fourth submission of the Ld. Counsel for the Appellant, the demand notice was sent to two addresses, i.e., Amba Gardens and Masab Tank, whereas the service proof has come subsequently on the record by the Financial Creditor with respect to Amba Gardens. What is relevant in the service to the Personal Guarantor even if service is completed at one address given by the financial creditor which is Masab Tank address, which is part of the decree of the DRT, where the address of the Appellant was shown as Masab Tank, Hyderabad. There is no escape for the Appellant to contend that the Appellant has not been served. Service at Masab Tank, Hyderabad thus has to be accepted service of notice. We are of the view that the mere fact that, evidence with regard to Amba Gardens has been brought subsequently shall not vitiate the proceedings. From the facts and records and the submissions, it is clear that the decree which was passed by DRT as early as February, 2019 is staring to the Appellant and the proceedings under Section 95 once initiated was withdrawn on the ground that notice was not served and thereafter the Financial Creditor again initiated proceedings in the year 2024.
17. After effecting the service as noted above, we are of the view that submissions which are raised by the Appellant are submissions in desperation to save himself from the proceedings, which is consequent and imminent on the decree being not satisfied, as passed by the DRT. We are of the view that, there is Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 12 of 13 no error in passing of the impugned order by the Ld. Adjudicating Authority in Section 95 application, we however observe that RP has to give opportunity to the Appellant to submit a repayment plan in accordance with the provisions of the I & B Code, 2016 and Personal Guarantors Rules, 2019, which shall be placed before the creditors and considered in accordance with law.
18. Subject to these observations we dismiss both the company appeals.
[Justice Ashok Bhushan] (Chairperson) [Justice Sharad Kumar Sharma] Member (Judicial) [Jatindranath Swain] Member (Technical) AR/MS/AK Company Appeal (AT) (CH) (Ins) No. 167 &168/2026 Page 13 of 13