NCLT Mumbai Admits Insolvency Resolution Against Personal Guarantor Kushan Nandy

Tribunal Upholds Independent Jurisdiction of Insolvency Proceedings Against Personal Guarantors, Despite Absence of Corporate Debtor Insolvency Case

In a significant ruling, the National Company Law Tribunal (NCLT) Mumbai Bench, presided over by Shri Prabhat Kumar and Shri Sushil Mahadeorao Kochey, has admitted the insolvency resolution process against Mr. Kushan Nandy, a personal guarantor for M/s Kushan Nandy & Kiran Shroff Pictures Private Limited, under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC). The decision was rendered on November 7, 2025, underlining the tribunal's independent jurisdiction to adjudicate insolvency proceedings against personal guarantors, irrespective of any pending Corporate Insolvency Resolution Process (CIRP) against the corporate debtor.

The case, filed by Indian Bank, involves an outstanding debt amounting to Rs. 9.92 crore as of January 31, 2023. The tribunal dismissed the respondent's jurisdictional challenge, affirming that the absence of CIRP against the corporate debtor does not impede proceedings against personal guarantors. This stance aligns with the Supreme Court's precedent in State Bank of India v. Mahendra Kumar Jajodia and Lalit Kumar Jain v. Union of India, which recognize the distinct and co-extensive liability of personal guarantors.

Further, the tribunal addressed the respondent's challenge on the grounds of limitation. It noted that the invocation of the guarantee through a SARFAESI Act notice was valid and that various acknowledgments of debt extended the limitation period. The exclusion of the COVID-19 pandemic period, as per the Supreme Court's directive, was also considered, ensuring the claim's timeliness.

The interim moratorium under Section 96 of the IBC has been activated, staying all concurrent proceedings, including those in the Debt Recovery Tribunal, concerning the same debt. This moratorium will last 180 days or until the tribunal passes an order on the repayment plan, whichever is earlier.

Resolution Professional Ms. Aakriti Sood has been appointed to oversee the insolvency process. The tribunal has ordered public notices to invite creditor claims and directed the applicant bank to deposit funds for the resolution professional's fees and expenses.

This ruling underscores the NCLT's crucial role in facilitating the insolvency resolution of personal guarantors and affirms that personal insolvency proceedings can progress independently of corporate debtor cases.

Bottom Line:

Insolvency Resolution Process against Personal Guarantor to Corporate Debtor can be initiated under Section 95 of the Insolvency and Bankruptcy Code, 2016, irrespective of the pendency of Corporate Insolvency Resolution Process against the Corporate Debtor.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 95, 96, 101, 114; Limitation Act, 1963 - Section 18

Indian Bank v. Kushan Nandy, (NCLT)(Mumbai Bench - I) : Law Finder Doc Id # 2816646