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2025 Supreme(Online)(NCLT) 5033
NATIONAL COMPANY LAW TRIBUNAL
Shri. Vinay Goel, Smt. Madhu Sinha, JJ
M/s. Kerala Financial Corporation – Appellant
Versus
Dr. Bharath Chandran – Respondent
CP(IBC)/24/KOB/2022 | CP(IBC)/23/KOB/2022 | IA(IBC)/121/KOB/2025 | IA(IBC)/118/KOB/2025 | IA(IBC)/117/KOB/2025
For the Appellant:Mr. Vinod P V, Advocate
For the Respondent:Mr. Liju V Steephen, Advocate, Mr. M Sreekumar, Advocate
The court affirmed the discretion to condone delays in bankruptcy applications under the Insolvency and Bankruptcy Code, balancing procedural timelines with the principles of justice.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 121 and 123 - Applications for bankruptcy against personal guarantors seeking condonation of delay - Delay attributed to ongoing sale of assets and a previous moratorium - Court condones the delay for filing bankruptcy applications but imposes a deposit condition. (Paras 18-25)
(B) Limitation Act, 1963 - Section 5 - Condonation of delay principles discussed - Adjudicating Authority’s discretion regarding time limits under the Bankruptcy Code noted. (Paras 21-24)
Facts of the case:
The Kerala Financial Corporation seeks to initiate bankruptcy proceedings against personal guarantors due to their default on debts related to the Corporate Debtor, Trivandrum International Health Services Limited, with relevant delays explained.
Findings of Court:
The delay in filing bankruptcy applications condoned, subject to the Applicant depositing Rs. 25,000/- in each case with the National Defence Fund.
Issues: Whether the delay in filing applications under Section 121 is condonable and what implications arise from previous procedural actions.
Ratio Decidendi: The moratorium's application differs for personal guarantors, allowing some flexibility concerning procedural timelines while ensuring that attempts to fulfill statutory requirements are not obstructed by legitimate delays.
Result: Delay condoned with conditions.
| Table of Content |
|---|
| 1. introduction of bankruptcy applications against personal guarantors. (Para 1 , 2 , 3) |
| 2. delay due to previous moratorium on corporate debtor. (Para 4 , 5) |
| 3. discussion on condonation of delay under the statute. (Para 8 , 18) |
| 4. responses regarding prior applications and their impact. (Para 11 , 12) |
| 5. court's interpretation of mandatory timelines in statutory context. (Para 20 , 23) |
| 6. court's final ruling on condonation with conditions. (Para 24 , 25) |
ORDER
Per: Coram
1. These two applications have been filed by the Kerala Financial Corporation, Applicant/Creditor, seeking condonation of delay in filing applications under Section 123 (1) of the Insolvency and Bankruptcy Code, 2016 , for initiating bankruptcy proceedings against Dr. Bharath Chandran and Dr. Ashalatha Nair, who had extended personal guarantees for the debt of the same Corporate Debtor, namely Trivandrum International Health Services Limited. As the legal and factual issues in both matters are identical, they have been heard together, and a common order is being passed.
2. The Applicant submits that Dhanlaxmi Bank Ltd. initiated the resolution process against the Respondents, who are the personal guarantors of the Corporate Debtor, pursuant to the order dated 22.12.2022 in application CP(IBC)/23/KOB/2022 and CP(IBC)/24/KOB/2022 filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 . Mr. Rajmohan R was appointed as the Resolution Professional. The Applicant filed its claim for an amount of Rs. 66,80,93,213.52/- on 22.12.2022 with the Resolution Professional, and the said claim was admitted. The Applicant is also a member of the Committee of Creditors.
3. It is submitted that during the resolution process, the personal guarantors failed to submit any repayment plan. Consequently, this Adjudicating Authority, vide order dated 21.12.2023 in IA(IBC)/277/KOB/2023 and IA(IBC)/278/KOB/2023, permitted the creditor and/or debtor to file applications for bankruptcy under Section 121 of the Insolvency and Bankruptcy Code, 2016 . The Applicant further submitted that, being one of the creditors whose claim against the personal guarantors has been admitted by the Resolution Professional but remains unresolved in the resolution process, it is therefore entitled to apply for initiating bankruptcy proceedings against the Respondents.
4. The Applicant states that Dhanlaxmi Bank initially filed applications under Section 121 (2) of the Insolvency and Bankruptcy Code, 2016 , to initiate bankruptcy proceedings against the personal guarantors on 13.03.2024. However, the said applications were subsequently withdrawn on 11.06.2024 without the knowledge of the present Applicant. The Applicant submitted that in accordance with Section 94 of the Code, a moratorium was in effect for a period of 90 days from the date of filing the said applications until their withdrawal. Due to this moratorium, the Applicant was precluded from initiating any legal proceedings during that period and was, therefore, in a position to initiate the bankruptcy process only after the withdrawal of the earlier applications, i.e., on 11.06.2024.
5. It is further stated by the Applicant that the bankruptcy applications filed on 04.03.2025 resulted in a delay of 266 days in filing the applications. This delay was neither intentional nor deliberate but was necessitated by the ongoing sale of assets of the Corporate Debtor, which was in its final stages.
6. The Applicant further submits that this Adjudicating Authority, vide order dated 07.02.2020 in IBA/51/KOB/2019, admitted the Corporate Debtor, Trivandrum International Health Services Limited, into the Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 . As no Resolution Plan was approved during the Corporate Insolvency Resolution Process, this Adjudicating Authority, vide order dated 02.06.2022 in IA(IBC)/49/KOB/2022 in IBA/51/KOB/2019, directed the liquidation of the Corporate Debtor. Duri
