2026 Supreme(Online)(NCLT) 3793

NATIONAL COMPANY LAW TRIBUNAL
Sanjiv Jain, Member (Judicial), Venkataraman Subramaniam, Member (Technical)
Indian Bank – Appellant
Versus
S P Bhooma – Respondent
CP(IB)/219(CHE)/2024

A petition under Section 95 of the IBC against a Personal Guarantor is maintainable before the NCLT even if no CIRP or liquidation proceedings are pending against the Corporate Debtor, and the liquidation of the Corporate Debtor does not discharge the Guarantor's liability.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 60(1), 60(2), 79(1), 94, 95, 100, 101, 102, 104, 105, 106, 107, 108, 109, 110, 111, 112, 114, 128, 139, 179, 208 - Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 - Rule 7(2) - Indian Contract Act, 1872 - Sections 128 and 139 - SARFAESI Act, 2002 - Section 13(2) - Limitation - Limitation period for filing application under Section 95 of IBC is governed by Article 137 of the Limitation Act, 1963 - A decree or Recovery Certificate from DRT gives a fresh cause of action - Period from 15.03.2020 to 28.02.2022 excluded for limitation (Suo Moto W.P. No. 3 of 2020). (Paras 27, 28, 29)

(B) Jurisdiction - NCLT has jurisdiction under Section 60(2) of IBC to entertain a petition under Section 95 against a Personal Guarantor even if no CIRP or liquidation proceedings are pending against the Corporate Debtor - Section 60(2) does not bar such filing - Registered office of corporate debtor determines territorial jurisdiction. (Paras 22, 23)

(C) Guarantee - Invocation of guarantee - A notice under Section 13(2) of SARFAESI Act demanding payment from the Personal Guarantor in terms of the guarantee can be treated as an invocation - A demand notice under Form-B, without specific invocation, may not alone suffice. (Paras 30, 31)

(D) Personal Guarantor’s Liability - Release or discharge of principal borrower due to liquidation does not absolve the Personal Guarantor - Liability arises from an independent contract of guarantee. (Para 20) (E) IBC, 2016 - Chapter III (Sections 94 to 187) was notified on 01.12.2019 - Pre-notification judgments (e.g., State Bank of India v. Ramakrishnan) have no applicability. (Para 20) (F) Admission of petition - Section 95 - For admission, the Tribunal must consider existence of debt and default - Debt must exceed Rupees One Crore - Default is proved. (Paras 32, 34) (G) Moratorium - Under Section 101, moratorium is declared on admission - It ceases after 180 days or on approval of repayment plan whichever is earlier. (Para 36) (H) Repayment Plan - Resolution Professional to prepare list of creditors, assist debtor in preparing repayment plan, and submit report to NCLT. (Para 36)

Facts of the case:
The Financial Creditor (a bank) filed a petition under Section 95 of IBC, 2016, against the Personal Guarantor who stood guarantee for loan facilities availed by a Corporate Debtor. The Corporate Debtor was ordered to be liquidated by the High Court in 2012. The bank had already obtained a Recovery Certificate from the Debt Recovery Tribunal (DRT) against the Corporate Debtor and the Personal Guarantor. The Personal Guarantor objected to the maintainability of the petition before NCLT, arguing that since the Corporate Debtor was liquidated, no CIRP was pending, and therefore, the DRT was the appropriate forum.

Findings of Court:
The NCLT held that the petition under Section 95 was maintainable before NCLT, even without a pending CIRP against the Corporate Debtor, following the precedent in Mahendra Kumar Jajodia. The liquidation of the Corporate Debtor does not discharge the Personal Guarantor’s liability. The debt and default were proved, and the petition was admitted. Moratorium was declared, and a Resolution Professional was appointed.

Issues: (i) Whether a petition under Section 95 of IBC against a Personal Guarantor is maintainable before NCLT when no CIRP or liquidation proceedings are pending against the Corporate Debtor (which was already liquidated)? (ii) Whether the Guarantor’s liability is discharged due to the liquidation of the principal borrower? (iii) Whether the petition was barred by limitation? (iv) Whether the guarantee was validly invoked?

Ratio Decidendi: (i) NCLT has jurisdiction under Section 60(2) to entertain Section 95 petitions against Personal Guarantors irrespective of whether CIRP/liquidation proceedings are pending against the Corporate Debtor. (ii) The liability of a surety is co-extensive with that of the principal debtor and is not discharged by the liquidation of the principal debtor. (iii) A Recovery Certificate issued by DRT gives a fresh cause of action for limitation purposes. (iv) A notice under Section 13(2) of the SARFAESI Act demanding payment from the Personal Guarantor in terms of the guarantee can be treated as a valid invocation of the guarantee.

Result: Petition under Section 95 of IBC admitted. Insolvency proceedings initiated against the Personal Guarantor. Moratorium declared. Resolution Professional appointed.