Asset Reconstruction Company (India) Limited vs Vasudevan Sathyamoorthy

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2026 Supreme(Online)(NCLT) 1248

NATIONAL COMPANY LAW TRIBUNAL
Sunil Kumar Aggarwal, Judicial Member, Radhakrishna Sreepada, Technical Member
Asset Reconstruction Company (India) Limited – Appellant
Versus
Vasudevan Sathyamoorthy – Respondent
I.A. No. 110/2026 in/and C.P. (IB) No. 178/BB/2024

Important Points

Section 97(3)-(5) requirement to direct Board for resolution professional nomination is directory; Adjudicating Authority may appoint directly from IBBI-shared panel under Rule 8(2) for personal guarantors.

Subject

Insolvency and Bankruptcy - Personal Guarantors

Act Referred

Insolvency and Bankruptcy Code, 2016: S.95(1), S.97(3), S.96, S.99
I&B (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtors) Rules, 2019: R.7(2), R.8
Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2025

Headnote

(A) Insolvency and Bankruptcy Code, 2016 - Sections 95(1), 96, 97(3)-(5), 99 - I&B (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtors) Rules, 2019 - Rule 7(2), 8 - Application under Section 95(1) filed directly by financial creditor for initiating insolvency resolution process against personal guarantor - Objection that mandatory procedure under Section 97(3)-(5) not followed as no direction issued to Board for nominating resolution professional and direct appointment made from creditor's proposal - Held, in view of Rule 8(2) enabling Board to share panel of insolvency professionals with Adjudicating Authority and object of expeditious process, requirement of specific direction to Board is directory; Authority can appoint any professional from panel shared by Board without fresh nomination - Previous appointment set aside, fresh appointment made from current panel - Resolution professional directed to file report under Section 99; interim moratorium invoked. (Paras 16-28)

(B) Statutory Interpretation - Mandatory vs Directory - When statute prescribes manner of doing act, act must be done in that manner or not at all - However, word 'shall' in Section 97(3) held directory in light of Rule 8, IBBI panels/guidelines for avoiding delays, and judgments interpreting provisions as enabling direct appointment from empanelled professionals to ensure independence with efficiency. (Paras 17-25)

Facts of the case:
Financial creditor filed application under Section 95(1) against personal guarantor for default on guaranteed loan of up to Rs.86 crores disbursed to corporate debtor, with assignment of rights through chain of agreements. Outstanding dues exceeded Rs.72 crores as on specified date despite part payments. Authority initially appointed resolution professional proposed by creditor without directing Board; matter remitted by superior courts for fresh consideration of procedural compliance.

Findings of Court:
Procedure under Section 97(3)-(5) harmonized with Rule 8; fresh resolution professional appointed from current panel with directions to file Section 99 report, invoke interim moratorium under Section 96, and parties to deposit initial fee.

Issues: Whether appointment of resolution professional without directing Board under Section 97(3) and awaiting nomination under Section 97(4) violates mandatory procedure; scope of Rule 8 in permitting direct appointment from shared panel.

Ratio Decidendi: Requirement to direct Board for nomination under Section 97(3) is directory when Board has shared panel under Rule 8(2); Adjudicating Authority empowered to appoint empanelled professional directly to expedite process while ensuring neutrality.

Result: Objection application disposed; new resolution professional appointed.

Advocates:
For the Petitioner: Pramod Nair, Chintan Chinappa
For The Respondent: Shyam Sundar, Dr. Vandana P.L.

Table of Content
1. loan disbursement, guarantee, defaults, and assignment to creditor (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. procedural history and higher court interventions (Para 9 , 10 , 11 , 12)
3. respondent's objection to non-compliance with section 97 (Para 13 , 14 , 17 , 18)
4. court harmonizes section 97 with rule 8 for rp appointment (Para 15 , 16 , 26 , 27)
5. petitioner's defense on directory nature of section 97 (Para 19 , 20 , 21 , 22 , 23 , 24 , 25)
6. appointment of new rp and insolvency process directions (Para 28 , 29 , 30 , 31)

O R D E R

1. The present Application was filed by Sammaan Capital Limited (“Petitioner/Financial Creditor’) under Section 95(1) of the IBC, 2016, read with Rule 7(2) of the I&B (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (“ Personal guarantor Rules”) with a prayer to initiate Insolvency Resolution Process against Mr. Vasudevan Sathyamoorthy (Personal Guarantor/Respondent) who has given personal guarantee to loans availed by the M/ s. FineFacilis Management Private Limited (“Corporate Debtor”)

2. It is stated that the approached Indiabulls Commercial Credit Limited (“ICCL / Original Lender”), sanctioned a loan of up to Rs. 86,00,00,000/- (Rupees Eighty Six Crores Only) in favour of Fine Facilis Management Limited (“Corporate Debtor”) vide Sanction Letter dated 06.07.2021.

3. Pursuant to the Sanction Letter, a Loan Agreement dated 12.07.2021 was executed between ICCL and the Corporate Debtor, in terms of which financial assistance of up to Rs. 86,00,00,000/- was extended, out of which an amount of Rs. 80,09,55,000/- (Rupees Eighty Crores Nine Lakh Fifty Five Thousand Only) was disbursed on July 15, 2021 on the terms and conditions set out therein and under the Loan Agreement, the tenure of the loan was 60 months from the date of first disbursement, i.e., 15.07.2021, and interest was payable monthly commencing from 05.10.2021 with the last instalment on 05.07.2026, the principal loan amount was agreed to be repaid in four equal bullet payments of Rs. 18,00,00,000/- each on 05.07.2023, 05.072024, 05.07.2025, and 05.07.2026 respectively.

4. Further, under Clauses 12 and 12.2 of the Loan Agreement, non-payment of amounts due on the due date constitutes an “Event of Default”, upon which the entire loan becomes forthwith due and payable and the lender is entitled to enforce the security and the Corporate Debtor’s obligation to repay the loan, along with interest and other amounts, was secured by Deed of Guarantee, Demand Promissory Note in favour of ICCL for Rs. 86,00,00,000/- and Deed of Guarantee dated 12.07.2021 and Clause 2.1.1 of the Deed of Guarantee, the Personal Guarantor irrevocably and unconditionally guarantees to the Lender punctual performance by the Borrower of all of its obligations under the Loan Documents and in the event of the Borrower failing to perform any of its obligations under the Loan Documents, the Personal Guarantor shall, on first demand by the Lender without any contest or delay, pay to the Lender the Guarantee Amount as stipulated in Schedule I of the Deed of Guarantee i.e. in favour of the Petitioner in consideration of Petitioner having granted Term Loan/ credit facilities to the Corporate Debtor, for an sum upto Rs. 86,00,00,000 guaranteeing due repayment of the amount advanced by the Petitioner to the Corporate Debtor together with interest and cost. The Clause 2.1.2 of the Deed of Guarantee states that Personal Guarantor undertakes that if Obligor(s) does not pay amount when due and/or payable under or the Loan Documents and/or does not comply with the terms and conditions of the Loan Documents, the Personal Guarantor, shall pay the same within three days of demand by the Lender.

5. Thereafter on 10.01.2023, an Assignment Agreement was executed between ICCL and Indiabulls Housing Finance Limited (IHFL), whereby ICCL assigned various loans, including the financial assistance extende