Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 3262

NATIONAL COMPANY LAW TRIBUNAL
Sanjiv Jain, Judicial Member, Venkataraman Subramanian, Technical Member
State Bank of India – Appellant
Versus
Prasanth Boorugu – Respondent
CP(IB)/217(CHE)/2022 | IA(IBC)/1360(CHE)2025 | IA/227(CHE)/2024

Advocates:
For the Appellants/Petitioners: M.L. Ganesh, Hirendernath
For the Respondents: Aakansha Nehra, Himangi Arora

The insolvency of a corporate debtor and the subsequent approval of a resolution plan do not discharge a personal guarantor from liability, as the guarantor’s obligation is co-extensive and arises from an independent contract. Additionally, a debt recovery certificate constitutes a fresh cause of action to initiate insolvency proceedings.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 60(3), 95, 99, 100, 101 - Indian Contract Act, 1872 - Section 128 - Personal Guarantor - Insolvency Resolution Process - Liability of surety is co-extensive with that of the principal debtor, and the release or discharge of a principal borrower by an involuntary process like a resolution plan does not absolve the guarantor’s liability arising from an independent contract. (Paras 37, 39, 40)

(B) Limitation Act, 1963 - Article 137 - Section 238A of IBC - Debt Recovery Certificate - Issuance of a recovery certificate by a competent tribunal or court gives rise to a fresh cause of action for a financial creditor to initiate insolvency proceedings, within three years from the date of the certificate. (Paras 42, 44)

(C) Jurisdiction - An application under Section 95 is maintainable before the adjudicating authority having territorial jurisdiction over the registered office of the defaulting entity. (Para 36)

Facts of the case:
A financial creditor initiated insolvency proceedings against a personal guarantor following default on credit facilities provided to a borrower. The borrower’s debt was previously subject to a resolution plan approved by a tribunal, and a recovery certificate was issued by a specialized debt tribunal. The respondent contested the application, citing time-bar, lack of territorial jurisdiction, and the contention that the debt was discharged via the corporate resolution process. Simultaneously, an application was filed by an interested party to exclude certain properties from the insolvency estate due to existing attachments by a state authority.

Findings of Court:
The tribunal found that the application was filed within the statutory limitation period, counting from the date of issuance of the recovery certificate and accounting for mandated exclusions. It rejected the plea that the debtor’s resolution extinguished the personal guarantor’s liability, emphasizing the co-extensive nature of such obligations.

Issues: Whether the insolvency application against a personal guarantor is barred by limitation, whether the approval of a corporate resolution plan extinguishes the guarantor's liability, and whether the tribunal has the territorial jurisdiction to entertain the proceedings.

Ratio Decidendi: The court held that the liability of a surety remains independent and co-extensive despite the resolution of the principal debtor. Furthermore, it ruled that a recovery certificate creates a fresh cause of action for limitation purposes, and territorial jurisdiction is determined by the location of the principal borrower's registered office.

Result: Petition admitted; insolvency resolution process initiated against the respondent.

Table of Content
1. initiation of insolvency against personal guarantor for loan defaults. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9)
2. role and report validation of the interim resolution professional. (Para 10 , 11)
3. arguments regarding limitation, jurisdiction, and discharge of guarantor liability. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21)
4. interplay between mpid act attachment and ibc insolvency proceedings. (Para 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32)
5. liability of personal guarantor is co-extensive with corporate debtor. (Para 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46)
6. appointment of rp and imposition of statutory moratorium. (Para 47 , 48 , 49)

IN THE NATIONAL COMPANY LAW TRIBUNAL

DIVISION BENCH (COURT– I) CHENNAI

ATTENDANCE CUM ORDER SHEET OF THE HEARING

HELD ON 09.06.2026 THROUGH VIDEO CONFERENCE

CORAM: HON'BLE SHRI SANJIV JAIN, MEMBER (JUDICIAL)

HON'BLE SHRI VENKATARAMAN SUBRAMANIAM, MEMBER (TECHNICAL)

IN THE MATTER OF : State Bank of India

Prashant Boorugu

MAIN PETITION NUMBER : CP(IB)/217(CHE)/2022

(IA/MA) APPLICATION NUMBERS

IA(IBC)/1360(CHE)2025

ORDER

CP(IB)/217(CHE)/2022

IA(IBC)/1360(CHE)2025

Present: None for the Petitioner

Ms. Himangi Arora, Ld. Counsel for the Respondent / Personal Guarantor

Vide common order pronounced in the open Court, petition is admitted.

Insolvency proceedings are initiated against the Respondent / Personal Guarantor viz., Mr. Prashant Boorugu.

Mr. Sudhir GS is appointed as RP.

The report of the IRP is taken on record and the Application IA(IBC)/1360(CHE)2025 is disposed of.

-sd- -sd-

[VENKATARAMAN SUBRAMANIAM] [SANJIV JAIN]

MEMBER (TECHNICAL) MEMBER (JUDICIAL)

Date: 09.06.2026

ALONG WITH

IA/(IBC)/1360/CHE/2025

CP(IB)/217(CHE)/2022

(Filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016)

National Spot Exchange Limited,

Represented by its Authorized Representative,

Having Registered Office at

1st Floor, Malkani Chamber,

Off: Nehru Road, Opp: Hotel Airlink, Vile Parle (East),

Mumbai-400 099 ......Applicant

-Versus-

1. Mr. Pankaj Srivastava,

(Registration No. IBBI/IPA-001/IP-P00245/2017-2018/10474),

Interim Resolution Professional,

Residing at No. 58, 3rd Cross, Vinayaka Nagar,

Hebbal, Bangalore, Karnataka-560 024

2. Mr. Prasanth Boorugu

Villa No. 85, Adarsh Palm Retreat,

Devarabeesanhalli, Outer Ring Road,

Sarjapur Road, Varthur Post,

Bangalore – 560 103

3. State Bank of India,

Represented by its Assistant General Manager,

Stressed Assets Management Branch,

2nd Floor, LHO Campus,

#65, St. Marks Road, Bengaluru-560 001

…..Respondents

Present:

For Applicant : Shri. Hirendernath, Advocate

For Personal Guarantor : Ms. Aakanksha Nehra, Advocate

For State Bank of India : Shri. M.L. Ganesh, Advocate

CORAM

SANJIV JAIN, MEMBER (JUDICIAL)

VENKATARAMAN SUBRAMANIAN, MEMBER (TECHNICAL)

Order pronounced on 9th June, 2026

COMMON ORDER

(Hearing through hybrid mode)

1. This Application CP(IB)/217/CHE/2022 has been filed u/s. 95 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 by State Bank of India (“Financial Creditor”) for initiating insolvency resolution process against Prasanth Boorugu (“Personal Guarantor”) in respect of Default Amount of Rs. 157,12,74,647/- (Rupees One Hundred Fifty-Seven Crores, Twelve Lakhs Seventy-Four Thousand Six Hundred Forty-Seven Only) as on 06.05.2022. The Date of Default, as specified in Part-III of the application is 02.05.2017. This Application has been filed on 26.05.2022.

2. Part – I of the application sets out the details of the Applicant / Financial Creditor. It has its registered office at Stressed Asset Management Branch, 2nd Floor, LHO Campus, #65, St. Marks Road, Bengaluru – 560 001. Part-II of the application sets out the details of the Personal Guarantor. The address of the Respondent is mentioned is Villa No.85 Adars

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2026 Supreme(Online)(NCLT) 3262

NATIONAL COMPANY LAW TRIBUNALSanjiv Jain, Judicial Member, Venkataraman Subramanian, Technical MemberState Bank of India – AppellantVersusPrasanth Boorugu – RespondentCP(IB)/217(CHE)/2022 | IA(IBC)/1360(CHE)2025 | IA/227(CHE)/2024

Cases Referred (1)

NATIONAL COMPANY LAW TRIBUNAL
Sanjiv Jain, Judicial Member, Venkataraman Subramanian, Technical Member
State Bank of India – Appellant
Versus
Prasanth Boorugu – Respondent
CP(IB)/217(CHE)/2022 | IA(IBC)/1360(CHE)2025 | IA/227(CHE)/2024