Threshold for initiating personal insolvency must be Rs. One Crore, rejecting the lower threshold of Rs. 1000.

ORDER

Ld. Counsel representing the Financial Creditor/ Canara Bank is present through VC.

1. These petitions have been filed for initiating the PIRP against the Personal Guarantors. The details of the debt and default have been mentioned in Part-III at page no.8 of the paper book.

2. It has been averred in the petition as also submitted by the Ld. Counsel representing the Financial Creditor that as per para 8 at page no.12 of the paper book the amount of default is Rs.47,06,982/-, being the liability of the Respondents/ Guarantors, in terms of a Consent Decree dated 10.07.2021.

3. It has also been averred that the demand notice dated 12.12.2024 U/s 95(4)(b) of the Code, has also been issued by the Financial Creditor to the Respondents/ Guarantors.

4. While arguing the matter, the Ld. Counsel representing the Financial Creditor states that therefore the total liability as coming against the Personal Guarantors is Rs.47,06,982/-, which however happens to be less than the threshold limit of Rs. One Crore as mandated for the purpose of maintaining the PIRP petition against the Personal Guarantor U/s 95 of the Code.

5. We also notice that in a recent judgment passed by the Hon’ble NCLAT in Company Appeal (AT) (Insolvency) No.9 of 2025 titled as “ Mudraksh Investfin Pvt. Ltd. v/s Gursev Singh ” dated 02.05.2025, the point with respect to the maintainability of the petition for want of meeting the threshold, has come up for consideration before the Hon’ble NCLAT. In that case also, the total liability as against the Principal Borrower was Rs.10.0 Lakh as on the date of default. The Financial Creditor in that case, has also invoked the personal guarantee on 15.10.2023 for the aforesaid amount, which however did not meet the threshold limit of Rs. One Crore.

6. The NCLT, New Delhi in terms of an order dated 14.02.2024 has dismissed the petition on the ground of not meeting the threshold of Rs. One Crore. The aforesaid Appeal filed by the Financial Creditor arising out of the order of NCLT, was also dismissed in terms of the order dated 02.05.2025. The operative and relevant part of the aforesaid judgment passed by the Hon’ble NCLAT is as under :-

7. A short but very interesting question has arisen for consideration in this Appeal, i.e., what is the threshold for filing an Application under Section 95 , sub-section (1) by the Financial Creditor against the Personal Guarantor. Whether the threshold is Rs.1 crore as provided in Section 4 or it is Rs.1000/- as provided in Section 78 of the IBC, is the question to be answered. Section 4 , which provides for threshold for filing an Application for insolvency against the CD is Rs.1 crore with effect from 24.03.2020. Section 60 of the IBC provides for 'Adjudicating Authority for corporate person'. Section 60 , sub- section (1), (2), (3) and (4) are as follows:

"60. Adjudicating Authority for corporate persons. –

(1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of a corporate person is located.

(2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor shall be filed before the National Company Law Tr