NCLT Ahmedabad Bench Initiates Insolvency Resolution Process Against Personal Guarantor Puneet Singh Jaggi
Personal Guarantor's Liability Confirmed in Corporate Debt Default Case; Moratorium Commences for Insolvency Resolution
In a significant ruling, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) has admitted the insolvency resolution process against Puneet Singh Jaggi, the personal guarantor to corporate debtor Gensol Engineering Limited. The decision was rendered on October 13, 2025, following a petition filed by Equentia Financial Service Private Limited, highlighting a default amount of Rs. 9,91,39,155.
The tribunal, composed of Mr. Shammi Khan and Mr. Sanjeev Sharma, upheld the initiation of insolvency proceedings based on documentary evidence, including a facility agreement, guarantee deeds, and loan recall notices. The judgment emphasized that the guarantor's liability is co-extensive with the principal debtor, as per Section 128 of the Indian Contract Act, 1872.
The NCLT's order follows the principles laid down by the Supreme Court in Lalit Kumar Jain v. Union of India, affirming the process for personal guarantors to corporate debtors. Equentia Financial Services had provided a purchase invoice discounting facility of Rs. 15 crore to Gensol Engineering Limited, secured by personal guarantees from Puneet Singh Jaggi and another individual.
Despite attempts by Gensol Engineering Limited to propose repayment plans, the defaults persisted, leading to the invocation of the personal guarantees. The tribunal noted that the financial creditor's claim had been admitted in the corporate insolvency resolution process against Gensol Engineering Limited, but the personal guarantee remains enforceable independently.
The judgment clarifies that parallel proceedings against corporate debtors and their personal guarantors are permissible under the Insolvency and Bankruptcy Code, 2016. The tribunal appointed Mr. Ativ Hasmukhbhai Patel as the Resolution Professional to oversee the insolvency process, including the publication of notices and preparation of a repayment plan.
The ruling establishes a moratorium under Section 101 of the Insolvency and Bankruptcy Code, 2016, ceasing legal actions against the debtor's assets and rights during the resolution period. The judgment underscores the code's aim to protect creditor interests and maximize value through structured insolvency proceedings.
The tribunal's order is a crucial development in insolvency jurisprudence, affirming the framework for addressing defaults by personal guarantors alongside corporate debtors. Legal experts anticipate that this case will serve as a precedent for similar matters involving personal guarantees in corporate insolvency scenarios.
Bottom Line:
Insolvency and Bankruptcy Code - Admission of insolvency resolution process against personal guarantor to corporate debtor upheld based on existence of financial debt and default established through documentary evidence including facility agreement, guarantee deed, and loan recall notice.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 95, 100, 101, 102, 104, 105; Section 128 of Indian Contract Act, 1872
