NCLT emphasized the enforceability of personal guarantees and the procedural framework for initiating insolvency proceedings against personal guarantors.
The National Company Law Tribunal (NCLT), Jaipur Bench, comprising Judicial Member Mr. Deep Chandra Joshi and Technical Member Mr. Velamur G. Venkata Chalapathy, addressed a petition and observed that the appointment of a Resolution Professional (RP) under Section 97 of the IBC does not require adjudication on jurisdictional issues, including limitation, which should be addressed at a later stage under Section 100. The NCLT Bench emphasized the role of personal guarantees in corporate debt recovery and the judicial process for initiating insolvency proceedings against personal guarantors. It also highlighted the application of Section 95 of the IBC and reiterated the importance of adhering to timelines and procedures to ensure effective debt resolution, affirming the enforceability of personal guarantees in such proceedings.
The case involved an application filed by SBI under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate insolvency proceedings against a personal guarantor to the Corporate Debtor. The Corporate Debtor had defaulted on repayment of loans amounting to ₹7.3 crores, which were secured by personal guarantees, including that of Mrs. Singhal. Despite efforts by SBI to recover the debt, including issuing recall notices and taking symbolic possession of mortgaged properties, the loans remained unpaid. As a result, SBI invoked the personal guarantee of Mrs. Singhal, seeking initiation of insolvency proceedings to recover the outstanding amount.
The NCLT considered the application under Section 95(1) of the IBC, which allows creditors to file for insolvency against personal guarantors when their liability has crystallized following a default. The tribunal noted the legal validity of invoking personal guarantees and the procedural framework established by the IBC to facilitate insolvency proceedings against personal guarantors. The case illustrated the enforceability of personal guarantees in the recovery process and underscored the importance of legal remedies under insolvency law for the recovery of corporate debts. The application was considered timely, and the insolvency process was initiated with the appointment of a resolution professional, signifying the serious legal consequences for personal guarantors in default cases under the IBC.
This order emphasizes the role of personal guarantees in corporate debt recovery and the judicial process for initiating insolvency proceedings against personal guarantors. It highlights the application of Section 95 of the IBC in such cases and reiterates the importance of adhering to timelines and procedures in insolvency processes to ensure effective debt resolution.
Mr. Shivangshu Naval and Mr. Akanksha Noval, Advocates represented the Applicant.
Mr. Prateek Kedawat, Advocate represented the Respondent/Personal Guarantor.
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