NCLAT held that the applications against personal guarantors must be filed before the same NCLT Bench where insolvency proceedings against the corporate debtor are pending.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra & Arun Baroka (Technical Members) was hearing miscellaneous appeals and held that under Section 60(2) of the IBC, applications against personal guarantors must be filed before the same NCLT Bench where insolvency proceedings against the corporate debtor are pending. However, it clarified that 'NCLT' in this context includes benches of the NCLT, and applications can be heard by different courtrooms of the same Bench. Therefore, orders passed by different courts of the same NCLT Bench in such cases are within their jurisdiction.
The NCLAT recently rendered a judgment addressing three appeals arising from orders issued by the Adjudicating Authority in insolvency proceedings. In two appeals filed by Kookmin Bank under Section 95 of the IBC against personal guarantors, Resolution Professionals were appointed by the Adjudicating Authority, prompting appeals from the guarantors. Another appeal involved an order from a different insolvency proceeding.
The key legal question revolved around the jurisdiction of the NCLT to entertain Section 95 applications when insolvency proceedings against the corporate debtor were pending before a different court of the same NCLT Bench. The NCLAT examined relevant provisions of the Companies Act, 2013, and Section 60 of the IBC, which determine the Adjudicating Authority.
After considering submissions and legal provisions, the NCLAT addressed whether orders passed under Section 95 applications by different courts of the same NCLT Bench lacked jurisdiction and whether Section 60(2) required such applications to be heard in the same courtroom. The Tribunal emphasized the need for consolidation of proceedings before the same NCLT Bench for effective adjudication.
The NCLAT clarified that 'NCLT' in Section 60(2) includes benches of NCLT, with the President having authority over work allocation. It concluded that Section 95 applications could be heard by different courtrooms of the same Bench, in accordance with the President's orders. Therefore, the orders passed by different courts in the present case were within their jurisdiction.
In summary, the NCLAT provided clarity on the interpretation of Section 60(2) of the IBC, affirming the authority of the NCLT, including its benches, to handle applications related to personal guarantors and confirming the jurisdiction of different courts within the same Bench to adjudicate on such matters.
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