india

Updated: Dec 04, 2019 07:55 IST

A Tirupati-based small-scale industrialist filed the country’s first personal insolvency petition before the National Company Law Tribunal at its Amaravati bench in Hyderabad on Monday when the Insolvency and Bankruptcy Code (IBC) for personal guarantors to corporate debtors came into force.

The petition was filed by 60-year-old O V Ramana, former member of Tirumala Tirupati Devasthanams (TTD), under Section 94 (1) of the IBC, 2016, to get out of a prolonged legal battle with the banks in the Debt Recovery Tribunal.

In his petition (copy of which is with HT), Ramana said he had stood personal guarantor for five firms – Nithin Grains and Mills Pvt Ltd, Nithin Proteins Pvt Ltd, Nithin Nutritions Pvt Ltd, Ramanasree Consumer Products Pvt Ltd and Ramana Sri Logistics Pvt Ltd, for loans taken from Bank of India for business operations.

“The outstanding debt as of now for the bank is around Rs 38.66 crore. The bank conducted e-auction of the pledged properties, including a residential house-cum-commercial property in Tirupati and a residential flat at Puppalguda in Ranga Reddy district, twice but the auction had failed. These properties still remained unsold and the documents are with the bank,” Ramana said in the petition.

Ramana’s counsel V K Sajith told HT that once the NCLT initiates the insolvency process, he would get an interim relief from all his liabilities. “Now, the tribunal will ask the petitioner to come out with a proposal on how he would repay the outstanding loan and then place the same before the banker. It will facilitate the petitioner to get out of the debts in a dignified way without facing any legal hassles within a specified period,” Sajith said.

Ramana attributed his company’s losses to demonetisation. “The sudden decision resulted in severe liquidity crisis and my business, flour mills, which was running mostly on cash transactions, was crippled completely. It had an impact on my other business activities as well,” he said.