Case: Anita Goyal v. Vistra ITCL (India) Ltd. and Anr.

📌 Company Appeal (AT) (Insolvency) No. 2282 of 2024 with Company Appeal (AT) (Insolvency) No. 2283 of 2024

The National Company Law Appellate Tribunal (NCLAT) has delivered a significant ruling clarifying the jurisdiction of the National Company Law Tribunal (NCLT) vs. Debt Recovery Tribunal (DRT) in cases involving the insolvency of personal guarantors.

Key Legal Issue:

📌 Whether an application for personal insolvency against a personal guarantor must be filed before the NCLT if no CIRP or liquidation proceedings of the Corporate Debtor are pending before the NCLT?

Legal Provisions Analyzed:

✔️ Section 179 of the IBC: Adjudicating authority for individuals and partnership firms is the Debt Recovery Tribunal (DRT).
✔️ Section 60(2) of the IBC: When a CIRP or liquidation process is pending before the NCLT, any related insolvency or bankruptcy proceedings against corporate or personal guarantors must also be filed before the same NCLT.
✔️ Interpretation of “Without Prejudice” Clause: The phrase “without prejudice” in Section 60(2) does not limit the general applicability of Section 60(1), confirming that NCLT has jurisdiction over personal guarantor insolvency cases, regardless of whether CIRP or liquidation is pending.

Judicial Precedents Considered:

1️⃣ State Bank of India vs. Mahendra Kumar Jajodia (NCLAT)
2️⃣ Mahendra Kumar Agarwal v. PTC India Financial Services Ltd. and Anr. (NCLAT)
✅ Held that applications under Section 95 by a financial creditor against a personal guarantor are maintainable even if no CIRP or liquidation proceedings are pending against the Corporate Debtor.

3️⃣ Lalit Kumar Jain vs. Union of India & Ors. (Supreme Court)
✅ Confirmed that personal guarantors are a distinct category of individuals under IBC, and NCLT has jurisdiction over their insolvency proceedings.

4️⃣ Aditya Birla Finance Ltd. vs. Sarita Mishra (NCLT) and Tata Capital Financial Services Ltd. vs. Arjun Agarwal (NCLT)
❌ NCLAT held that these decisions were incorrect and per incuriam (legal errors).
✅ Reaffirmed that a financial creditor can file insolvency applications against personal guarantors even if no CIRP or liquidation process is pending against the Corporate Debtor.

Final Ruling by NCLAT:

✅ NCLT has exclusive jurisdiction over personal guarantor insolvency cases, even if no CIRP or liquidation is pending against the Corporate Debtor.
✅ Applications filed by financial creditors against personal guarantors without an active CIRP or liquidation process are fully maintainable.
✅ Overruled conflicting decisions that restricted NCLT’s jurisdiction in such cases.

📌 Why This Decision Matters?

✔️ Clarifies the legal position on personal guarantor insolvency cases under the IBC, 2016
✔️ Ensures uniformity in adjudication of insolvency applications against personal guarantors
✔️ Strengthens the role of NCLT in handling insolvency matters under Section 60(1) & (2) of IBC

- Advertisement -

🚀 Stay updated with the latest legal developments and important case laws in insolvency law!

📌 Also Read:

🔗 NLIU-CRIL Article Writing Competition – Register by March 10, 2025
🔗 Legal Internship at JRTC Intern (Feb 10, 2025, Delhi, ₹7,000 Stipend)
🔗 Master’s Programme in Public Policy by NLSIU – Apply Now
🔗 Internship at the Chambers of Retired Hon’ble Ms Justice Hima Kohli, Delhi (Hybrid)
🔗 Online Legal Internship Opportunity by LawInternships (Feb–Mar 2025)
🔗 Call for Papers: HPNLU Journal of Disability Studies – Apply by May 15, 2025