Case Note & Summary
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, delivered a common judgment in two connected appeals filed by Mr. Rajesh Bhatia and Mr. Ashwani Kumar Bhatia against Canara Bank and the Resolution Professional. The appeals challenged the order dated 20.03.2024 passed by the National Company Law Tribunal (NCLT), Chennai, in CP(IB)/57(CHE)/2024, which admitted an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) against the appellants as personal guarantors. The financial creditor, Canara Bank, had filed the application seeking initiation of insolvency resolution process against the personal guarantors for recovery of dues. The appellants contended that the debt was not legally recoverable and that the application was barred by limitation. However, the NCLAT observed that the appellants had acknowledged the debt in writing and had not raised any dispute before the NCLT. The Tribunal found no merit in the appeals and dismissed them, upholding the admission order. The judgment also noted that upon admission, an interim moratorium under Section 96 IBC comes into effect, prohibiting any further legal proceedings against the guarantors. The NCLAT concluded that the appeals were devoid of substance and liable to be dismissed.
Headnote
A) Insolvency and Bankruptcy Code - Personal Guarantor - Section 95(1) - Admission of Application - The appellants, personal guarantors, challenged the order admitting a Section 95(1) application filed by the financial creditor. The NCLAT held that the appeals were not maintainable as the appellants had acknowledged the debt and did not raise any dispute before the NCLT. The Tribunal found no infirmity in the impugned order and dismissed the appeals. (Paras 1-11) B) Insolvency and Bankruptcy Code - Interim Moratorium - Section 96 - Effect of Admission - The NCLAT noted that upon admission of the Section 95(1) application, an interim moratorium under Section 96 takes effect, which prohibits any legal proceedings against the personal guarantor. The appeals were dismissed as the appellants failed to show any error in the admission order. (Paras 6-11)
Issue of Consideration
Whether the appeals against the admission of a Section 95(1) application under the Insolvency and Bankruptcy Code, 2016 are maintainable when the appellants had acknowledged the debt and failed to raise objections before the Adjudicating Authority.
Final Decision
Both appeals are dismissed. The impugned order dated 20.03.2024 passed by NCLT, Chennai in CP(IB)/57(CHE)/2024 is upheld.
Law Points
- Section 95(1) IBC
- personal guarantor
- insolvency resolution
- debt acknowledgment
- limitation
- maintainability of appeal
- scope of Section 96 IBC
- interim moratorium
