Insolvency Case Directed to NCLT Delhi Due to Territorial Jurisdiction Constraints
The Kerala High Court, on May 25, 2026, dismissed a writ petition filed by K.N. Marzook challenging proceedings initiated by Dhanlaxmi Bank Limited under the Insolvency and Bankruptcy Code, 2016 (IBC) at the National Company Law Tribunal (NCLT), Delhi. The petitioner, acting as a personal guarantor, contended that part of the cause of action arose in Kerala since the credit facilities were availed in the state. However, the court, presided over by Justice Harisankar V. Menon, concluded that the writ petition was not maintainable in Kerala due to territorial jurisdiction constraints dictated by the IBC.
The legal dispute arose when the NCLT, Delhi, allowed Dhanlaxmi Bank Limited to rectify an error in the application related to personal guarantors and subsequently initiated personal insolvency proceedings against Marzook. The petitioner's legal team argued that Article 226(2) of the Indian Constitution allows for writ petitions to be filed in any High Court where a part of the cause of action arises. Despite this contention, the court emphasized that the specific provisions of the IBC take precedence, as Section 60 mandates that insolvency proceedings must be filed where the registered office of the corporate entity is located—in this case, New Delhi.
The court's decision underscores the importance of adhering to specific statutory provisions over general jurisdiction principles, particularly in cases involving complex financial regulations such as the IBC. Justice Menon reiterated that the adjudicating authority for corporate persons and their guarantors is the NCLT with territorial jurisdiction over the corporate entity's registered office location. Consequently, the Kerala High Court lacked jurisdiction to entertain the petition, leading to its dismissal.
The ruling serves as a critical reminder for litigants to carefully consider jurisdictional mandates when challenging legal proceedings under specialized statutes like the IBC. The court did not address the alternative remedy argument presented by the respondent, as the primary issue of territorial jurisdiction was dispositive.
Bottom line:-
Writ petition challenging proceedings under Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal (NCLT) - Held, Article 226(2) of the Constitution of India permits filing writ petitions where part of the cause of action arises within the State; however, proceedings under IBC must be filed before the NCLT having territorial jurisdiction over the registered office of the corporate person - Writ petition dismissed as not maintainable.
Statutory provision(s): Article 226(2) of the Constitution of India, Sections 60 and 95 of the Insolvency and Bankruptcy Code, 2016.
K.N. Marzook v. Dhanlaxmi Bank Limited, (Kerala) : Law Finder Doc id # 2919702
