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2026 Supreme(Online)(NCLAT) 191
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Arun Baroka, Member (Technical)
Harish Kumar Mittal – Appellant
Versus
State Bank of India – Respondent
Company Appeal (AT) (Insolvency) No. 2363 of 2024|Company Petition CP (IB) No. 798/MB/2021
For the Respondents:Mr. Asav Rajan, Mr. Kashish Chadha, Mr. Aditya Shah, Advocates for R-1, Ms. Yahya Batatawala, Advocate for RP
In personal guarantor insolvency under IBC Sections 95-100, summary proceedings focus on debt/default existence; pre-existing disputes, stamp duty, notice defects irrelevant; natural justice met via RP report and hearing despite non-recorded e-filed reply.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 95, 99, 100, 61 - Personal guarantors to corporate debtors - NCLT Rules, 2016 - Rule 2(14) - Appeal against admission of Section 95 application - E-filed reply not formally taken on record despite multiple listings - Appellant heard during arguments - No violation of natural justice as opportunity provided before RP and NCLT - Pre-existing disputes, insufficient stamp duty on guarantee deed, defects in recall/demand notices irrelevant in summary proceedings under Sections 95/100 - Proceedings limited to ascertaining default - Appeal under Section 61 maintainable for personal guarantors as per Sections 60(1) and 61 read together. (Paras 25-44)
(B) Natural justice - Principles of - Audi alteram partem - Non-consideration of e-filed reply not fatal where debtor heard on merits - RP's report under Section 99 recommendatory; NCLT to apply judicial mind under Section 100 within 14 days - Dilatory tactics by debtor discouraged under strict IBC timelines. (Paras 29-39)
Facts of the case:
Financial creditor filed Section 95 application against personal guarantor of corporate debtor based on deed of guarantee for defaulted credit facilities classified as NPA. NCLT admitted petition under Section 100 initiating personal insolvency resolution process, noting no reply filed despite directions. Appellant challenged on grounds of natural justice violation, non-consideration of reply raising pre-existing disputes, invalid guarantee invocation, creditor misconduct, pending suit, incomplete accounts, and insufficient stamping.
Findings of Court:
Reply e-filed but not on record per Rule 2(14); appellant heard; all defenses considered at appellate stage and found meritless. Pre-existing disputes irrelevant under Section 95; stamp duty, notice defects not examinable in summary proceedings; default established via RP report, guarantee execution, and notices.
Issues: Maintainability of appeal under Section 61 against Section 95 order; violation of natural justice due to non-consideration of reply; validity of admission despite alleged defects in guarantee invocation, pre-existing disputes, creditor-induced default, pending suit, incomplete accounts, and insufficient stamping.
Ratio Decidendi: In personal guarantor insolvency under Part III IBC, summary nature limits inquiry to debt and default existence; pre-existing disputes and document admissibility issues not grounds for rejection; natural justice satisfied via RP examination and hearing before admission; e-filed reply not deemed filed without registry acceptance; dilatory claims rejected to uphold timelines.
Result: Appeal dismissed. (Para 45)
| Table of Content |
|---|
| 1. factual background of pirp initiation under section 95 ibc (Para 1 , 2 , 3 , 6 , 7) |
| 2. reply filed but not recorded; natural justice violation claimed (Para 4 , 5 , 8 , 9 , 24 , 27 , 28 , 30 , 31) |
| 3. appellant heard; dilatory tactics in ibc proceedings rejected (Para 11 , 13 , 14 , 32 , 33 , 36 , 37 , 38 , 39) |
| 4. appeal maintainable under section 61 for personal guarantors (Para 12 , 25 , 26) |
| 5. pre-existing disputes irrelevant for section 95 admission (Para 15 , 16 , 17 , 18 , 35 , 40) |
| 6. guarantee invocation valid despite stamping and notice defects (Para 22 , 42 , 43) |
| 7. rp report confirms debt and default by personal guarantor (Para 34 , 44) |
| 8. appeal dismissed; pirp upheld (Para 45) |
JUDGMENT
(Hybrid Mode)
[Per: Arun Baroka, Member (Technical)]
The present Appeal is against the Order December 9, 2024 (Impugned Order) passed by the Hon'ble National Company Law Tribunal, Bench IV at Mumbai (NCLT) in Company Petition No. 798 of 2021 (CP 798 of 2021) under Section 100 of the Insolvency and Bankruptcy Code, 2016 (IBC). By the Impugned Order, the NCLT admitted CP 798 of 2021 and initiated insolvency resolution process against the Appellant.
2. On the CP (IB) No. 798/MB/2021 filed by State Bank of India (SBI) against Harish Kumar Mittal Personal Insolvency Resolution Process(PIRP) has been initiated against the Appellant under Section 100 of the Code. This Appeal under Section 61 of the Code challenges the order in the above mentioned Company Petition.
3. The Appellant is one of the ex-directors of Mercator Limited (Corporate Debtor). Respondent No. 1 is the State Bank of India, the Petitioner in CP 798 of 2021, one of the financial creditors of the Corporate Debtor. Respondent No. 2 is the Resolution Professional (RP) appointed by the Hon’ble NCLT vide the Impugned Order. CP No. 798 of 2021 was filed by Respondent No. 1 to initiate insolvency resolution process against the Appellant under Section 95 of the IBC on the basis of Deed of Guarantee dated March 25, 2013 (Guarantee Deed).
4. Appellant contends it filed Affidavit in Reply dated March 1, 2024 (Reply) to CP 798 of 2021 on the website of the Hon’ble National Company Law Tribunal on March 1, 2024. Further, the Advocates for the Appellant served a copy of the Reply upon the respective Advocates for Respondent No. 1 and the resolution professional appointed by the Hon’ble NCLT.
5. On October 15, 2024, the Hon’ble NCLT heard CP No. 798 of 2021 and reserved the same for orders. Appellant also claims that on October 15, 2024, the Advocates for the Appellant advanced their arguments and even tendered the original physical Reply (which was already e-filed) to the Hon’ble NCLT for their convenience. Further it is claimed that the Advocates for the Appellant advanced detailed arguments and made various references to the averments made by the Appellant in their Reply, which were heard and noted by the Hon’ble NCLT. It is also claimed that the Hon’ble NCLT did not, at any point state either that the Reply of the Appellant was not filed or that the Reply filed by the Appellant was not being considered by the Hon’ble NCLT.
6. In the above backdrop, the Impugned Order was pronounced by the Hon’ble NCLT on December 9, 2024 and the same was uploaded on the website of the Hon’ble National Company Law Tribunal on December 10, 2024. Pertinently, the Impugned Order was passed on the basis that the Respondent had failed to file the Reply.
7. It will be instructive to note the background of the case in which PIRP has been initiated against the appellant, which is noted as below:
RELIEFS SOUGHT
8. The Appellant had prayed for the following relief(s):
a) Set aside the Order dated December 9, 2024 passed by the Hon’ble National Company Law Tribunal, Mumbai (Bench IV) in Company Petition (IB) No. 798 of 2021;
b) Direct that Company Petition (IB) No. 798 of 2021 be heard afresh by the Hon’ble National Company Law Tribunal, Mumbai after considering the Affidavit in Reply dated March 1, 2024 filed by the
