SBI may challenge order against taking over guarantor’s assets

NEW DELHI: State Bank of India is likely to challenge the National Company Law Appellate Tribunal’s order barring it from taking control of the assets of the personal guarantor of a loan that had turned bad.

The nation’s largest lender had invoked its right under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act against the personal guarantor to recover Rs 6.11crore from Veesons Energy. The notice was challenged by Veesons, the corporate debtor, in the Madras High Court. SBI had taken “symbolic possession of the secured assets”. The tribunal’s February 28 order restrained SBI from proceeding against the personal guarantor in the case while the moratorium period granted for debt resolution under the Insolvency and Bankruptcy Code (IBC) was in force.

An email sent to the bank remained unanswered till press time Wednesday. The latest ruling of the appellate tribunal has come as a setback to lenders who were keen on invoking the personal guarantees of promoters in insolvent companies simultaneously with IBC proceedings. In two previous judgments, NCLAT had said the moratorium would only apply to the properties of the corporate debtor.

The ministry of corporate affairs too is looking into the issue after bankers flagged the case. The 14-member law committee in its last meeting held on Monday had discussed the matter as well. The final recommendations are expected to be submitted this week by the ministry.