Rama Agro Foods Private Limited entered the corporate insolvency resolution process after the National Company Law Tribunal found that Central Bank of India had proved the principal debt, the company’s guarantee, its invocation and non-payment above ₹1 crore.
The Mumbai Bench-VI, comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar, admitted the bank’s Section 7 application. The corporate debtor had been set ex parte after service and repeated non-appearance.
“At this stage we are not quantifying the exact amount under default, which the IRP will do. We are satisfied that there exists a debt which is in default in excess of Rs. 1 Crore.”
— Para 5.20
Why it matters. A corporate guarantee creates an enforceable financial obligation when invoked according to its terms. At Section 7 admission, the tribunal asks whether financial debt and default exist and whether the application is complete; it does not conduct a trial to settle the exact claim amount or test the guarantor’s commercial ability to pay.
Guarantee invoked by email
Central Bank had sanctioned a ₹23.68 crore term loan in 2016 to Shri Gajanan Maharaj Sugar Limited, formerly Utech Sugar Limited. Rama Agro Foods executed a corporate guarantee on 14 December 2016.
The principal borrower’s account was classified as a non-performing asset on 29 December 2019. A demand under Section 13(2) of the SARFAESI Act followed on 2 January 2020. The principal borrower was itself admitted to CIRP on 31 July 2026 in C.P. No. 22 of 2026.
For the guarantor, the bank posted an invocation notice dated 17 January 2026 to its registered office. It returned on 2 February marked “Addressee Left without Instructions.” The guarantee deed deemed a posted demand served in the ordinary course. The bank also sent the invocation to the company’s registered email address on 10 February and treated that as the default date.
The Section 7 application followed on 26 February 2026, claiming ₹27,29,61,728.78. The tribunal found it timely. It also relied on the principal borrower’s 23 February 2023 one-time-settlement proposal, the audited balance-sheet acknowledgment as of 31 March 2024 and an authenticated NeSL record of default.
Section 7’s narrow inquiry
The Bench applied the Supreme Court’s 18 February 2026 decision in Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan. That ruling treated Innoventive Industries as the governing rule: once a due financial debt and default are shown, the admission inquiry is confined to those statutory conditions. Vidarbha Industries did not create a general discretion to reject admission because a debtor claims viability.
The documents showed disbursement to the principal borrower, execution of the loan and security instruments, a valid guarantee, default by the borrower, invocation against Rama Agro Foods and its immediate failure to pay. The application was complete, and no disciplinary proceeding was pending against the proposed interim resolution professional.
Limitation was tested at both levels. The principal borrower’s account became an NPA in December 2019, but the Supreme Court’s pandemic exclusion, the 2023 settlement proposal and the 2024 balance-sheet acknowledgment extended the relevant period. For Rama Agro Foods, the immediate obligation arose when its separate guarantee was invoked in February 2026, only 16 days before the petition was filed.
The tribunal also distinguished admission from recovery adjudication. An information-utility record authenticated the borrower’s default, while the guarantee deed fixed how demand could be served. Those materials were enough to cross Section 7’s gateway even though the bank’s claimed ₹27.29 crore will still be examined through the insolvency claims process.
Rama Agro Foods’ non-appearance did not relieve the bank of proof. The tribunal independently checked disbursement, security documents, service terms, limitation, the information-utility record and the proposed professional’s authorisation before admitting the company.
The tribunal left the precise quantum to the insolvency professional. That preserves the claims-verification process while recognising that the proved default already crossed the ₹1 crore admission threshold.
The judgement
The Bench declared a Section 14 moratorium, stopping suits, enforcement, asset transfers and recovery of property in the company’s possession for the statutory period. Essential supplies may not be interrupted, and management now vests in the insolvency professional.
The moratorium runs until completion of CIRP, approval of a resolution plan under Section 31(1), or a liquidation order under Section 33, whichever statutory event applies. Officers and managers must assist the IRP; the tribunal warned that non-cooperation could invite coercive steps.
Shekhar Arvind Parkhi was appointed interim resolution professional with authorisation valid through 30 June 2027. Central Bank must deposit ₹3 lakh for initial process costs, recoverable on priority when funds become available subject to the committee of creditors’ approval. The IRP must make the public announcement, notify statutory authorities and submit quarterly progress reports.
The tribunal did not quantify the final default, leaving that exercise to the IRP. It admitted the Section 7 application and placed Rama Agro Foods into CIRP; it did not order liquidation.
“The Adjudicating Authority is not expected to enter into an adjudication of disputed questions relating to the quantum of claim or to conduct a trial on contractual disputes.”
— Para 5.3
“Based on the examination of the above terms of the Corporate Guarantee, we find that the Applicant has invoked the guarantee of the CD in terms of the stipulations in the said guarantee.”
— Para 5.10
“As a result, the matter deserves to be admitted under Section 7 of the Code.”
— Para 5.19