NCLT Hyderabad Declares Personal Guarantor of Techtrans Constructions Bankrupt After No Repayment Plan

The National Company Law Tribunal (NCLT) at Hyderabad has recently ordered the bankruptcy of Pasam Laxmi Srinivas Reddy, the personal guarantor of Techtrans Constructions India Private Limited, an infrastructure firm. The tribunal said there was no repayment plan on record and no way forward for resolution.

The order was passed by Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri. Setting out the reason in clear terms, the bench said, “Admittedly, the repayment plan has not been submitted by the personal guarantor, and since there is no resolution plan for resolving the insolvency, we accept the prayer of the applicant and admit this petition to declare the personal guarantor bankrupt.”

The dispute goes back to loans extended by the State Bank of India to Techtrans Constructions India Pvt. Ltd., an infrastructure firm. The borrowings were secured by a personal guarantee given by Reddy. When the company repeatedly failed to service the loans, the account was classified as a non-performing asset on January 1, 2014.

SBI then issued notices under the SARFAESI Act and also approached the Debt Recovery Tribunal. The total default claimed by the bank is about Rs 413.12 crore.

While recovery proceedings were ongoing, insolvency proceedings were also set in motion against the personal guarantor under the Insolvency and Bankruptcy Code. An interim moratorium was declared, and a resolution professional was appointed. A committee of creditors was formed, with SBI as the sole secured creditor holding the entire voting share. Even then, no repayment plan was filed within the time allowed under the Code.

With no plan before it, the resolution professional asked the tribunal to allow the process to move ahead. The tribunal agreed, noting that the requirements under the Code had been met and that there was no scope left for resolution. It then declared Reddy bankrupt and appointed G. Ramanjaneyulu as the bankruptcy trustee.

He has directions to take charge of the estate, invite claims, and carry out the process in accordance with law.