Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 3424

NATIONAL COMPANY LAW TRIBUNAL
Prabhat Kumar, Technical Member, Sushil Mahadeorao Kochey, Judicial Member
Madhubala R Jain – Appellant
Versus
Bank Of India – Respondent
C.P. (IB) NO. 203/MB/2026

Advocates:
For the Appellants/Petitioners: Rachana Lad
For the Respondents: Mahesh Surekha, Ashlesha Rane

A Personal Guarantor's application under Section 94 of the IBC is maintainable even when SARFAESI recovery proceedings are pending, provided the initiation is not a sham proceeding meant solely to obstruct recovery. Pendency of SARFAESI actions does not automatically bar a guarantor's statutory right to seek insolvency resolution.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 94, 96, 100 - Personal Guarantor - Initiation of Insolvency Resolution Process - Statutory Moratorium - Admissibility of application filed under Section 94 - Whether such application is to be dismissed merely because recovery proceedings under SARFAESI Act are pending - Tribunal held that the right of a personal guarantor to invoke IBC proceedings cannot be taken away solely on the ground of prior initiation of SARFAESI proceedings provided the application is bona fide and not a tool just to stall recovery by misusing the interim moratorium under Section 96. (Paras 43, 46, 47)

Facts of the case:
The Petitioner, a Personal Guarantor to the Corporate Debtor, initiated an insolvency resolution process under Section 94 of the Code following the classification of the loan account as NPA and subsequent recovery actions by the Financial Creditor under the SARFAESI Act, including e-auction notices. The Financial Creditor opposed the petition, alleging the intent was merely to obstruct SARFAESI proceedings and abuse the moratorium.

Findings of Court:
The Tribunal noted that while the timing of the petition raised suspicion, the Petitioner had a statutory right to seek insolvency resolution. Unlike cited precedents where petitions were filed after a decade of dilatory tactics, this petition did not demonstrate such extreme mala fide. The application complied with all requirements of the Code, and therefore, the Tribunal admitted the petition.

Issues: Whether an application under Section 94 of the IBC is maintainable and liable to be admitted when recovery proceedings under the SARFAESI Act have been initiated against the Personal Guarantor, and whether such filing constitutes an abuse of process.

Ratio Decidendi: The Tribunal held that an application under Section 94 of the IBC cannot be rejected simply because SARFAESI recovery proceedings are pending. Unless the petition is proven to be a fraudulent or sham proceeding intended solely to obstruct recovery (as distinguished from established cases of decade-long evasion), the statutory right to insolvency resolution must be upheld alongside the declaration of a moratorium under Section 96.

Result: Application admitted; Insolvency Resolution Process initiated.

Table of Content
1. filing of insolvency application under section 94 by personal guarantor. (Para 1 , 2 , 3 , 4)
2. submissions regarding debt, default, and prior litigation conduct. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16)
3. applicability of interim moratorium despite sarfaesi proceedings. (Para 17 , 18)
4. resolution professional report and assessment of debt existence. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27)
5. allegations of abuse of process regarding sarfaesi obstruction. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35)
6. distinguishing prior precedents based on the absence of inordinate delay. (Para 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44)
7. interpretation of ibc objectives relative to recovery proceedings. (Para 45 , 46 , 47)
8. admission of section 94 petition and initiation of resolution process. (Para 48 , 49 , 50)

Brief facts:

1. The present Petition has been filed on 21.01.2026 by Smt. Madhubala R Jain (“Petitioner/Personal Guarantor”) under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 6(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking initiation of Insolvency Resolution Process against himself as the Personal Guarantor of M/s. Kankria Agro Limited (“Corporate Debtor”).

2. The Petitioner is an Indian citizen having her permanent address at 2310/11 1st Floor, Tilak Road Sonar Gali Nirmal Agencies, Nandurbar, Maharashtra 425412.

3. The Corporate Debtor, bearing CIN U15400MH2019PLC329553, was incorporated on 21.08.2019 under the Companies Act, 2013, having its registered office at Flat No. 403, Shree Heights, Guhkul Society, behind Kashinath Lodge, Jalgaon, Maharashtra – 425003.

4. The Petitioner stood as Personal Guarantor for the credit facilities availed by the Corporate Debtor from Bank of India, Jalgaon Branch (“Financial Creditor”). The date of default is stated as March 2025 and the amount in default is Rs. 5,01,64,000/-.

SUBMISSIONS OF THE PETITIONER:

5. It is submitted that Bank of India (“Financial Creditor”) sanctioned various credit facilities in favour of M/s. Kankria Agro Limited (“Corporate Debtor”) vide sanction letter dated 23.12.2019, which were subsequently renewed and reviewed from time to time. The said facilities were secured, inter alia, by a Deed of Guarantee dated 06.03.2023 executed by the Applicant along with other personal guarantors, namely Mr. Sudarshan Ravindra Jain, Mr. Nirmal D Jain, Mrs. Kantabai Dagdulal Jain and Mr. Vinodkumar Kevalchand Jain. Pursuant thereto, the immovable properties of the guarantors were mortgaged in favour of the Financial Creditor as collateral security.

6. It is further submitted that the Financial Creditor, vide sanction letter dated 29.09.2021, sanctioned and restructured credit facilities aggregating to Rs. 11,71,63,000/- in favour of the Corporate Debtor, comprising Cash Credit, Term Loans and FITL facilities.

7. The Applicant executed a Personal Guarantee dated 06.03.2023 in favour of the Financial Creditor guaranteeing repayment of the aforesaid facilities availed by the Corporate Debtor.

8. It is submitted that the credit facilities were thereafter revised vide review letter dated 20.03.2023, whereby the Financial Creditor continued and revised the existing Cash Credit, Term Loan and FITL facilities in favour of the Corporate Debtor.

9. It is submitted that upon failure of the Corporate Debtor to discharge its financial obligations, the loan account was classified as Non-Performing Asset (NPA) on 28.06.2025.

10. It is further submitted that the Financial Creditor issued a demand notice dated 01.07.2025 under Section 13(2) of the SARFAESI Act, 2002 , calling upon the Corporate Debtor and the personal guarantors to repay an amount of Rs. 5,01,11,035.45 together with applicable interest and other charges within 60 days from the date of said notice.

11. It is submitted that the Pe

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2026 Supreme(Online)(NCLT) 3424

NATIONAL COMPANY LAW TRIBUNALPrabhat Kumar, Technical Member, Sushil Mahadeorao Kochey, Judicial MemberMadhubala R Jain – AppellantVersusBank Of India – RespondentC.P. (IB) NO. 203/MB/2026

NATIONAL COMPANY LAW TRIBUNAL
Prabhat Kumar, Technical Member, Sushil Mahadeorao Kochey, Judicial Member
Madhubala R Jain – Appellant
Versus
Bank Of India – Respondent
C.P. (IB) NO. 203/MB/2026