The court ruled that insolvency proceedings involving personal guarantors must be directed to the NCLT when a corporate debtor is undergoing resolution or liquidation, as clarified by the Supreme Court.

JUDGMENT :

M.S. SONAK, J.

1. Heard learned Counsel for the parties.

2. We issue Rule in all these Petitions, given our order of 25 November 2025.

3. The learned Counsel state that substantially similar issues of law and facts arise in all these Petitions and therefore, they could be disposed of by a common judgment and order.

4. The learned Counsel for the Petitioners had submitted that the issue raised in these Petitions is squarely covered by the decision of the Hon’ble Supreme Court in the case of Lalit Kumar Jain Vs. Union of India, (2021) 9 SCC 321. Therefore, by our order of 25 November 2025, we had posted these matters for final disposal at the admission stage. We had already directed the Petitioners to serve a fresh notice upon the Respondents along with the copy of this order.

5. Our order dated 25 November 2025 reads as follows:-

“1. Mr Shah and Ms Gogri, learned counsel for the Petitioners state that the Respondents in these matters have been duly served and an affidavit of service is also filed.

2. The learned counsel for the Petitioners state that the issue raised in these Petitions is covered by the decision of the Hon’ble Supreme Court in the case of Lalit

2 Kumar Jain vs. Union of India.

3. Accordingly, we post these matters for final disposal at the admission stage on 10 December 2025 for “Directions/Disposal”.

4. The Petitioners should serve a fresh notice upon the Respondents along with a copy of this order.

5. All concerned to act upon an authenticated copy of this order.”

6. In compliance with the directions issued on 25 November 2025, the Petitioners have once again served all the Respondents and have even filed their affidavits of service. Mr Vinit Jain appears on behalf of the Debt Recovery Tribunal (DRT), and Ms Vyas appears for the Respondent-State. The other Respondents, despite service, have not appeared.

7. Given our order of 25 November 2025, posting these matters for final disposal at the admission stage on 10 December 2025, we have heard the learned Counsel and proceed to dispose of these Petitions finally.

8. Mr Shah, the learned Counsel for the Petitioner, submitted that there is ample material to suggest that the 2nd Respondent put up the 3r^d Respondent only to stall the proceedings initiated by the Petitioner under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). In any event, and without prejudice, He submitted that in terms of the law laid down by the Hon’ble Supreme Court in Lalit Kumar Jain (supra), the insolvency proceedings initiated by the 3^rd Respondent are required to be transferred to the National Company Law Tribunal (NCLT).

9. Mr Shah submitted that in Lalit Kumar Jain (supra), upon considering the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) has clarified the legal position and held that NCLT would be in the best position to consider the whole picture about the nature of assets available, either during the Corporate Debtor Insolvency Process (CIRP) or even later. Accordingly, he submitted that the proceedings initiated by the 3^rd Respondent before the DRT would not be maintainable and, in any event, liable to be transferred to the NCLT where the CIRP of the principal borrower is on. Mainly for this reason, He submitted that the Rule in all these Petitions be made absolute by declaring the proceedings before DRT are incompetent and without jurisdiction.

10. Ms Gogri, the learned Counsel for the Petitioner in Writ Petition No. 1494 of 2024, while adopting the arguments of Mr Shanay Shah, submits that the 2^nd Respondent in her Petition has initiated the proceedings before the DRT. Further, she pointed out that she was pressing for relief in terms of prayer clause (a) in addition to the other prayers. She points out that prayer clause (a) seeks quashing and setting aside of the DRT’s order dated 2^nd May 2022 by which the DRT has declared the interim moratorium under Section 96 of the IBC.

11. The contesting Resp