A petition filed under Section 95 of IBC for initiation of insolvency against Personal Guarantor which is collusive with an attempt to thwart the proceedings pending before the Hon’ble Bombay High Court under Section 9 of the Arbitration Act, is not maintainable – Neon Laboratories Ltd. Vs. Mayank Shah and Anr. – NCLAT New Delhi

In this case, the deed of personal guarantee provides that after the demand notice is served, 60 days time shall remain available with the guarantor for discharging his liability whereas in the present case, gap between the demand notice and the application u/s 95 of IBC is just approx. one month. Also, the petition under Section 95 was timed in such a manner that the proceedings filed by R1 under Section 9 of the Arbitration Act, pending before the Hon’ble Bombay High Court, may be stayed automatically in view of the operation of Section 96 of the Code. Hon’ble NCLAT upheld the decision of NCLT in which the application u/s 95 of IBC was dismissed and imposed a cost of Rs. 5,00,000/-.

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If any Public depositor applies showing due of the debt claiming itself as operational creditor and the Resolution Professional or the Tribunal do not accept the claim on the ground that they are not financial creditor, we allow the appellant to raise the question before the Tribunal and if any adverse decision is given by the Tribunal, it will be open to the appellant to raise the issue before NCLAT- Hind Motors India Ltd. Vs. Adjudicating Authority NCLT, Chandigarh – NCLAT New Delhi

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