The National Company Law Tribunal , Indore Bench , has officially admitted an insolvency petition against Manju Saurabh Garg, a personal guarantor for Excel Vehicles Private Limited . This ruling allows Tata Capital Limited to initiate the insolvency resolution process under Section 95 of the Insolvency and Bankruptcy Code, 2016 . The decision marks a significant development in the creditor ’s efforts to recover dues exceeding 6.28 crore rupees, a sum that had previously been the subject of a prolonged legal dispute.

The dispute stems from a channel finance facility originally sanctioned by Tata Capital to Excel Vehicles Private Limited in 2013 , which was later renewed in 2016 . Following the corporate debtor 's failure to repay the facility, Tata Capital invoked the personal guarantees provided by the respondent and other parties. The matter underwent arbitration , culminating in an award issued on February 18, 2022 , by a sole arbitrator, which declared the guarantors jointly and severally liable for a principal sum of over 3.04 crore rupees, alongside substantial interest and legal fees.

Resolving Challenges to Maintainability

Throughout the proceedings before the National Company Law Tribunal , the respondent, Manju Saurabh Garg, mounted a vigorous defense, raising multiple objections concerning jurisdiction , limitation , and the procedural validity of the Resolution Professional ’s report. The respondent contended that the application was barred by limitation and that the tribunal lacked jurisdiction due to an exclusive jurisdiction clause favoring courts in Mumbai, as stipulated in the guarantee agreement. Furthermore, she argued that the demand notice was never properly served and that the insolvency forum was being used inappropriately as a recovery mechanism.

The bench, comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta, conducted a detailed review of these contentions, ultimately dismissing each one. Addressing the respondent’s skepticism regarding the nature of the claim, the tribunal observed: “The Respondent's bare denial, and her general pleas that the claim is 'imaginary', 'not a debt' or that the IBC is a recovery forum, are without substance.” The court clarified that because the applicant is a regulated non-banking financial company and the debt had been clearly established via the arbitral award, the claim fell squarely within the definition of a debt under the code.

Regarding the limitation issue, the tribunal meticulously analyzed the timeline of default and the subsequent invocation of the guarantee. By factoring in the Supreme Court ’s orders regarding the exclusion of time due to the pandemic-related disruptions, the bench concluded that the petition remained well within the statutory limits . “The petition is, therefore, within the period of limitation , and the objection fails on the Respondent's own least favourable reckoning,” the tribunal noted in its order.

Overruling Objections on Procedure

The respondent also challenged the legitimacy of the Resolution Professional 's report, claiming that the report was delayed and that the professional had acted in secrecy without consulting her. The tribunal, however, deemed the timelines under the code as directory rather than mandatory in this context. The bench held that any minor procedural irregularities—such as the affidavit date preceding the report date or the perceived lack of consultation—were insufficient to invalidate the entire process. The court confirmed that the appointment of the Resolution Professional , Rajesh Ramnani, was regular and that he had sufficient material evidence to recommend the admission of the insolvency petition .

Furthermore, the tribunal rejected the respondent's plea that the guarantee document was inadmissible due to insufficient stamping. The members emphasized that proceedings under Section 95 of the code are summary in nature and focus primarily on the identification of a debt and a default. The bench clarified that alleged stamping deficiencies constitute curable defects and do not nullify the existence of an adjudicated liability or the underlying obligation of the guarantor.

Impact of the Moratorium and Next Steps

With the formal admission of the petition, an immediate moratorium has been imposed on the personal guarantor 's assets. Under the order, all pending legal actions against the respondent regarding the specific debt are stayed, and the respondent is prohibited from transferring, encumbering, or disposing of any assets, rights, or interests in her holdings. This moratorium is designed to preserve the estate while the insolvency process unfolds.

The tribunal has directed the Resolution Professional to proceed with the publication of a public notice within seven days. This notice will invite all creditors to register their claims within a 21-day window. Following this, the Resolution Professional is tasked with preparing a comprehensive list of creditors and working in consultation with the respondent to draft a repayment plan .

The court has also mandated that the applicant provide the necessary funding to cover the professional fees of the Resolution Professional , ensuring that the process maintains its integrity, independence, and impartiality. As the matter moves to the stage of claim collation and repayment planning, the focus will remain on whether the personal guarantor can propose a viable restructuring of her liabilities. This case serves as a notable precedent for financial creditors utilizing the Insolvency and Bankruptcy Code to enforce guarantees, even in instances where the debtor attempts to contest the debt through auxiliary legal avenues like arbitration and jurisdictional disputes. The resolution professional is expected to strictly adhere to the timelines and duties mandated by the code, bringing this matter toward a conclusive financial resolution.