Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 1313

NATIONAL COMPANY LAW TRIBUNAL
SANJIV JAIN, Judicial Member, VENKATARAMAN SUBRAMANIAM, Technical Member
A Sumathi – Appellant
Versus
Canara Bank – Respondent
CP(IBC)/323/CHE/2025

Advocates:
For the Appellants/Petitioners:A.S. Sathish Kumar, PCS, Mr. A.G. Sathyanarayana, Advocate
For the Respondents:Mr. Arjun, Ld. Counsel, Mr. Arjun Makuny, Advocate

For Section 94 petitions by personal guarantors, admission requires only proof of default; no assessment of repayment capacity or assets needed at threshold stage; RP role facilitative, not investigative.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 94, 99, 100, 101 - Personal Guarantors to Corporate Debtors - Application under Section 94(1) filed by personal guarantor after default and demand notice under SARFAESI - Tribunal not required to assess repayment capacity or sufficiency of assets at admission stage - Existence of default sufficient for admission - Role of resolution professional facilitative and recommendatory, not adjudicatory or investigative - Initiation of SARFAESI proceedings no bar to Section 94 petition - Insolvency proceedings against personal guarantor maintainable even without CIRP against corporate debtor - Petition admitted, moratorium declared, resolution professional appointed. (Paras 18-31)

(B) SARFAESI Act, 2002 - Section 13(2) - IBC proceedings not recovery mechanism but resolution framework - Comparative value maximisation under SARFAESI irrelevant for admission under Section 94. (Paras 25-27)

(C) Indian Contract Act, 1872 - Section 128 - Liability of surety co-extensive with principal debtor.

Facts of the case:
Personal guarantor of corporate debtor filed petition under Section 94 after corporate debtor's account declared NPA and demand notice issued under SARFAESI. Outstanding debt Rs.11.63 crores, default date 13.09.2025. Resolution professional recommended admission. Financial creditor objected citing sufficient secured assets, undisclosed properties per detective report, mechanical RP report, intent to stall recovery, and absence of CIRP against corporate debtor.

Findings of Court:
Petition admitted; insolvency resolution process initiated against personal guarantor; moratorium declared u/s 101; specified resolution professional appointed to publicise, receive claims, facilitate repayment plan.

Issues: (1) Whether repayment capacity to be assessed at admission stage? (2) Validity of RP report? (3) Effect of SARFAESI notice? (4) Maintainability without corporate debtor CIRP?

Ratio Decidendi: At admission, no enquiry into assets or repayment ability needed; default triggers Section 94. RP's role limited to examining compliance and recommending (Paras 20,22). SARFAESI proceedings no bar; co-extensive liability allows independent proceedings.

Result: Petition admitted.

Table of Content
1. personal guarantor's petition details debt default (Para 1 , 2 , 3 , 4 , 5 , 6)
2. irp verifies petition compliance recommends admission (Para 7 , 8 , 10 , 11)
3. respondent opposes admission citing assets sufficiency (Para 12 , 17)
4. tribunal reviews evidence of debt default (Para 13 , 14 , 15 , 16)
5. no repayment capacity assessment at admission stage (Para 18 , 19 , 20 , 21)
6. irp role facilitative recommendatory not investigative (Para 22 , 23 , 24)
7. sarfaesi proceedings no bar to ibc admission (Para 25 , 26 , 27)
8. pg insolvency maintainable sans corporate cirp (Para 28 , 29 , 30)
9. petition admitted irp appointed process initiated (Para 31 , 32 , 33 , 34)

O R D E R

(Hearing through hybrid mode

1. This Petition under Section 94 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC, 2016") r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 has been filed by A. Sumathi (“Personal Guarantor”). The prayer made in the petition is to initiate insolvency resolution process against the Personal Guarantor of the Corporate Debtor i.e., Biogen Fertilizers India Private Limited. The total debt outstanding together with interest is Rs.11,63,02,343/- (Rupees Eleven Crores Sixty-Three Lakhs Two Thousand Three Hundred and Forty-Three Only). The Date of Default, as specified in Part-III of the Petition is 13.09.2025. This Petition has been filed on 20.10.2025.

2. Part – I of the Petition sets out the details of the Petitioner / Personal Guarantor having address at No. 23-C-E, Cherarajan Street, Palace Towers, Salem TN 636 001. Part – III of the Petition provides the particulars of the date of default as 13.09.2025. The particular s of the Debt is extracted hereunder:

3. It is stated that the Corporate Debtor viz., Biogen Fertilizers India Private Limited had availed various credit facilities from the Respondent/ Financial Creditor between August 2018 and March 2023. The facilities are secured by the assets of the corporate debtor and the personal assets of the Guarantors (including that of the Applicant). In March 2019, the Corporate Debtor also availed loans from the Technology Development Board (TBD).

4. It is stated that the Corporate Debtor defaulted in meeting its repayment obligations to the Respondent and as a result of this default, the Respondent classified the Corporate Debtor's accounts as Non-Performing Assets (NPA) on 13.09.2025. The Respondent invoked the personal guarantee of the Applicant through a Demand Notice dated 15.09.2025 issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act").

5. It is stated that the Corporate Debtor and the Petitioner were engaged in continuous discussions with the Respondent and the Petitioner had made unstinted efforts to regularise the account. Since no response was forthcoming from the Respondent, the Petitioner is forced to file the present Petition under Section 94 of the IBC, 2016 to resolve her guarantee obligations.

6. It is stated the Corporate Debtor has not been undergoing Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.

7. On presentation of this petition, this Tribunal vide an order dated 18.11.2025, appointed CA S. Prabhu as the Interim Resolution Professional (“IRP”) to examine the petition and recommend for acceptance / rejection of the petition as contemplated under Section 99(1) of IBC, 2016.

8. Pursuant to the order, IRP submitted his report dated 10.12.2025 in 9. It is stated in the Report, that the petition filed herein complies with the statutory requirements, including the submission of Form A, payment of the prescribed fee, and provision of supporting documents. The debts listed in the application do not fall under the excluded debts as defined in Section 79(15) of the IBC. Furthermore, the petitioner

Click Here to Read the rest of this document

2026 Supreme(Online)(NCLT) 1313

NATIONAL COMPANY LAW TRIBUNALSANJIV JAIN, Judicial Member, VENKATARAMAN SUBRAMANIAM, Technical MemberA Sumathi – AppellantVersusCanara Bank – RespondentCP(IBC)/323/CHE/2025

For Section 94 petitions by personal guarantors, admission requires only proof of default; no assessment of repayment capacity or assets needed at threshold stage; RP role facilitative, not investigative.

Cases Referred (1)

NATIONAL COMPANY LAW TRIBUNAL
SANJIV JAIN, Judicial Member, VENKATARAMAN SUBRAMANIAM, Technical Member
A Sumathi – Appellant
Versus
Canara Bank – Respondent
CP(IBC)/323/CHE/2025