If no application for insolvency has been filed against the Corporate Debtor, a petition under Section 95(1) of IBC, filed against Personal Guarantor, is not maintainable before NCLT – Tata Capital Financial Services Ltd. Vs. Arjun Agarwal – NCLT Kolkata Bench
January 1, 2025
The Hon’ble NCLT Kolkata Bench held that: (i) If the Corporate Debtor has already been resolved or even liquidated and there is no scope for further value maximization of the Corporate person, the proceedings against the personal guarantor are relegated to a modus of recovery only and not that of resolution of insolvency. (ii) When the CIRP or liquidation proceeding is pending before a NCLT, an application relating to the Insolvency resolution or liquidation or Bankruptcy of a Corporate guarantor or Personal Guarantor, as the case may be of such Corporate Debtor, shall be filed before such NCLT ostensibly to avoid multiplicity of the judicial fora. However, when this is not so, the proceedings in our humble opinion are recovery proceedings only and not being a recovery forum, the NCLT shall not be the Adjudicating authority in such cases.