IN THE HIGH COURT AT CALCUTTA

(Constitutional Writ Jurisdiction)

APPELLATE SIDE

Present:

The Hon’ble Justice Krishna Rao

W.P.A. No. 27091 of 2025

Sanjay Jhunjhunwala & Ors.

Versus

Piramal Finance Limited & Ors.

Mr. Gopal Jain, Sr. Adv.

Mr. Ratnanko Banerjee, Sr. Adv.

Mr. Sankarsan Sarkar

Mr. Aditya Kanodia

Ms. Suparna Sardar

.....For the petitioners.

Mr. Tilak Kumar Bose, Sr. Adv. Mr. Krishnaraj Thaker, Sr. Adv.

Mr. Somdutta Bhattacharyya

Ms. Kiran Sharma Mr. Sagnik Aditya

.....For the respondents no. 1 & 2.

Hearing Concluded On : 01.12.2025 Judgment on : 03.12.2025

Krishna Rao, J.:

1. The petitioners are guarantors who have provided personal guarantees securing the Credit Facilities availed by the respondent no.3. The respondent no.1 is a non-banking financial company engaged in the businesses of lending monies to individuals, micro entrepreneurs and business across India. The respondent no.2 is the Security Trustee appointed by the respondent no.1 to hold security documents on behalf of the respondent no.1.

2. The grievances of the petitioners in the writ petition arises from the invocation of the jurisdiction of the Learned National Company Law Tribunal under Section 95 of the Insolvency and Bankruptcy Code, 2016 by the respondent no.2 despite the principal borrower having cleared the entire outstanding amounts due and payable along with penal interest.

3. Mr. Gopal Jain, Learned Senior Advocate representing the petitioners submits that the RBI Master Circular provides that a loan shall become NPA only if the interest is not paid for a consecutive period of 90 days. As per the Master Circular, there is no default committed by the borrower till the loan amount becomes NPA. In case there is any delay in payment of the outstanding amount, the same can be compensated by way of penal interest on the outstanding amount.

4. Mr. Jain submits that the respondent no. 3 has not only cleared the entire outstanding amounts due and payable along with the penal interest but has even made payment for the future quarterly installments under the Credit Facilities. He submits that as on the date of filing of the present petition, the majority of the Credit Facilities stands repaid and a meagre amount of Rs. 27.71 crores out of Rs. 102 crores remain outstanding (but not due and payable). He submits that the petitioners are the guarantors who have provided the personal guarantees securing the Credit Facilities availed by the respondent no. 3. It is the contention of the petitioners that once the debt due and payable to the Corporate Debtor has been paid by the principal borrower, no claim remains alive against the guarantors (Petitioners herein), no proceedings under the IBC can be instituted against the petitioners.

5. Mr. Jain submits that the Personal Insolvency Petitions initiated against the petitioners only with the mala fide intention to harass the petitioners. Mr. Jain relied upon the judgment in the case of Swiss Ribbons Private Limited & Anr. Vs. Union of India & Ors. reported in (2019) 4 SCC 17 and submits that from the Circular, it is clear that the accounts are declared NPA only if defaults made by a Corporate Debtor are not resolved. A person is a defaulter when an installment or interest on the principal remains overdue more than three months after which the accounts are declared NPA.

6. Mr. Tilak Kumar Bose, Leaned Senior Advocate representing the respondent no. 1 submits that there are two sets of proceedings pending before the Learned Adjudicating Authority i.e. the first set of proceeding is under Section 7 of the Insolvency and Bankruptcy Code, 2016 instituted by the respondent no. 1 against the respondent no. 3 who is a borrower and a second set of the proceeding is under Section 95 of the Insolvency and Bankruptcy Code, 2016, instituted by the respondent no. 3 against the petitioners who are the guarantors.

7. Mr. Bose submits that Clause 17.1.6 of the Loan Agreement permits the Trustee i.e. the respondent no. 2 to institute proceedings against th